• by Alberto Jimenez , December 10, 2014

Even with all the attention that mobile payments get in the media, it is not yet clear why merchants should care about them.

From a merchant’s perspective, investing in a new acceptance infrastructure could be an expensive proposition. Unfortunately, many of the mobile acceptance alternatives in the market are not interoperable and effectively conflict with each other. This convoluted space only increases the cost for merchants in the form of additional risk. The incentive for investment is simply not easy to articulate in the current environment.

But the reality is that the behavior of the average shopper has radically changed in the last five years. Outside of repeat-purchase categories, such as groceries, most product discovery and selection takes place (or at least begins) outside of the physical store and touches multiple channels.

From a purely financial perspective, omnichannel marketing that culminates in a mobile payments transaction, has the potential to reveal the actual return on investment of the multiple marketing tactics employed by retailers to trigger a sale. This connection has the power to forever transform marketing spend decisions across the industry.

Online merchants have been able to directly connect the initial marketing activity to the actual sale for years. However, face-to-face transactions still represent more than 90% of all commerce globally.

If we think about the shopping process as a journey that begins with product discovery activities on a larger screen at home or at the office and ends at checkout on a small screen at the physical store, the implications of gaining end-to-end visibility to the entire journey can translate into significantly higher conversion rates and savings by eliminating low-ROI marketing techniques.

This online/offline connected world is not yet a reality, and the payments portion is clearly the key missing piece in the shopping journey. The sensors (location) and apps (social information exchange) on a smartphone make it the best form factor for filling this gap by seamlessly enabling mobile checkouts.

There is a large business opportunity that can be unlocked by understanding the relationship between online and in-store activities that take place before a purchasing decision and an actual transaction. Mobile payments will connect the two worlds.