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Small Business

Managing Your Business

Mobile Wallets: Bringing Customers Closer to Merchants

Smartphone-Based Payments May Build Closer Business Relationships

Will anyone carry a wallet in the future? The caricature of Seinfeld's George Costanza with his "brick" full of credit cards, coupons, receipts, and who-knows-what-else may become a thing of the past as startups and large corporations deploy "mobile wallets."

Also known as "mWallets," "digital wallets," or "eWallets," these digital versions of the traditional wallet can offer many services — payments, coupons, loyalty programs, personal identity and more — and have the potential to enable closer relationships between business owners and their customers.

Mobile wallets are often tied to a customer's smartphone. Some include specific security features, or methods of information transfer, such as the near-field communications (NFC) technology used by some smartphones at payment terminals.

These new tools in theory will be much more powerful for everyone involved — consumers, checkout attendants and small and large businesses — once a secure end-to-end system is in place.

What Will Make Mobile Wallets Ubiquitous?

"The ubiquity and utility of mobile devices has created a seemingly endless demand for related services, a demand that is in fact speeding up," says Jake Ward, executive director of the Application Developers Alliance, a nonprofit organization that represents software developers.

The real question for mobile wallets is what will be the "tipping point" that pushes the technology over the edge, making it seem ubiquitous overnight.

It's possible that it may not be a fresh way of paying for things, but rather a convenient way to tie loyalty programs to the payment. “[Customers] are not specifically demanding new mobile payment offerings," Forrester Research Inc. analyst Thomas Husson said in a Wall Street Journal article earlier this year. “Having access to loyalty program points and rewards within a mobile wallet is the number one feature they are interested in."

Or, change may come because of technological progress and new policies. For instance, credit-card issuers are encouraging U.S. merchants to upgrade their brick-and-mortar payment terminals this year to accept chip-and-PIN cards for more secure payments.

How Mobile Wallets May Help Your Business

What are the benefits of this technology?

  • Fraud is expected to be reduced as a mobile wallet is in principle harder to steal or duplicate than a regular credit card or paper currency
  • Payment processing fees may be lower.
  • Payment time at the register is expected to be reduced, which is especially important to high-volume merchants like fast-food franchises.
  • Sales and incentives can be "pushed" to mobile devices to entice people to shop, perhaps during slower times of the day.

Connecting merchants directly to a rich software experience in the customer's hand can help enhance the customer experience and build a brand's value proposition. Beyond being prepared for mobile wallet payments, it will become important to have a comprehensive mobile strategy to win in your competitive market space.

So businesses should prepare for the coming future. The first step is education. The second is to begin taking steps to upgrade hardware and software solutions for accepting payments from customers.

Ready to upgrade your business to accept mobile wallet payments? Explore the ways Chase Paymentech can help.

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