At the point of sale (POS), the basic forms of payment have remained fairly stable for more than a decade: cash, checks, credit and debit cards, and gift cards. But as consumers adopt mobile wallets in greater numbers, merchants need to be ready to process these payments. And that means you'll want to integrate digital-wallet technology into your value-added reseller business plan.
But you might have a few questions about how this technology is evolving and what you can expect in the next few years. Here's what you need to know.
How do mobile wallets work? At a basic level, the digital wallet gives consumers a way to pay for goods and services without using a card or carrying cash. Instead, the customer uses a mobile device — usually a smartphone — in order to pay, by scanning a barcode or a QR code, by using a mobile app, or by tapping or waving an NFC-enabled device at the register. Mobile wallets are tied to the users' financial accounts (banks and credit, debit, and loyalty cards).
Who's using mobile wallets? Adoption is growing in the United States as evidenced by a study released in 2015 by market research firm Chadwick Martin Bailey. Nearly one in six (15%) of US consumers has used a mobile wallet in the past six months, up from 9% in 2013.
Are all mobile wallets the same? Industry experts divide the technology into two types: closed-loop and open-loop wallets. Closed-loop (think Starbucks) is store-specific, while open-loop (think Apple Pay) allows consumers to pay at multiple stores.
What vendors are in this space? Notable providers include PayPal Wallet, Apple Pay, and Google Wallet. Dating from 2011, Google Wallet recently acquired Softcard, a joint venture of Verizon, AT&T, and T-Mobile US. Now all Android phones from those carriers will come with Google Wallet pre-installed. Apple Pay entered the market in 2014, buoyed by the force of loyal iPhone users. With the iPhone 6 and the Apple Watch compatible with Apple Pay, more than 24 million US consumers have access to this mobile wallet. PayPal's traditional model already has about 60 million users, a group that includes plenty of potential mobile-wallet adopters.
How can you capitalize on this growing trend? With a strong surge in consumer interest in this technology comes merchant interest. Business owners need POS add-ons, upgrades, hardware, and software-as-a-service in order to adapt current payment systems to accept mobile wallets. It's a great time to start talking with your current clients about digital-wallet technology, as part of your value-added reseller business plan.
What should you look for when recommending mobile-wallet solutions? Ensure products are EMV-ready and NFC-enabled. And avoid mobile-wallet solutions not sanctioned, endorsed, or promoted by the major card brands. For the last 40 to 50 years, payment processing solutions have become deeply embedded with these consortiums. And that's not likely to change anytime soon. So the best advice is to invest in solutions that leverage existing channels to enable payment processing via the mobile device.
There's a lot of uncertainty surrounding mobile wallets, but with all the industry growth and consumer interest, it just makes sense to add this payment strategy to your value-added reseller business plan.
What's your take on mobile wallets as a part of your value-added reseller business plan?