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Citi exec: Mobile payments evolving into smart device utility

NEW YORK – As mobile use continues its upward spiral, mobile payments will be seen as part of the normal milieu, such as credit cards are now, and the mobile payment function will become a smart device utility instead of an application, according to a Citi executive at Mobile FirstLook: Strategy 2014.

In order for mobile payment use to grow and thrive, merchants will need to work with their creative and technology teams to add value to POS transactions, according to Richard Char, global head of digital networks and merchant services for global enterprise payments at Citi, New York. Consumers need to be engaged throughout the selling process.

“There’s got to be a view of what additional value you are creating,” said Mr. Char. “Are you bringing new customers to the merchants or are you helping merchants administer their loyalty programs better or are you directing customers to new programs?

“That’s where the value-added is. So you can almost think of it as an customer acquisition, among other things,” he said. “We’ve forgotten that there’s value created between merchants and consumers with each other, which we can create that incremental value, and then we can all live well in business models that try to take our fair share of our contribution towards that value-add.”

Mr. Char was among panelists at the “Banking and Payments: Why the Stalled Progress in Mobile Payments?” breakout session.

Moderator, at left, and panelists

In the stall
At some point, paying for something via a smartphone may become as common as paying with a credit card. Banks, merchants and retailers are watching very closely to see if a mobile payment type such as tab-based or tap-and-pay will catch on or if a new method will be developed.

No matter what the focus, consumers and their needs are to be considered.

It is important to do things that create incremental value for consumers, according to Mr. Char.

It also is important to keep the end goal in mind and to ask: “What is the added value?

Mobile payments could have numerous applications beyond sending group gifts or ordering takeout or delivery food.

At some point, the payment function could be similar to other utilities on smartphones, such as cameras, GPS and maps.

“The map app is really a utility,” Mr. Char said. “I’d argue that a lot of times payments really are utilities.”

At present, merchants and consumers are in a state of confusion about mobile payments, according to Brian Stein, managing director at Pervasive Path Consulting, Cleveland, OH.

“There are a lot of different offerings on the market and even similar offerings have different features and capabilities,” Mr. Stein said. “So as a consumer, I don’t actually know which one I want to carry with me on my phone, which apps I want to load and which apps I should use in which environment.

“I might have an NFC-enabled phone and not know how to turn NFC on so just having it alone isn’t enough,” he said. “And from a merchant’s standpoint there are so many different wallet options out there.

“How do you determine what to invest in and what to integrate into your POS in order to accept that payment?”

Attentive audience

Ready to go
Merchants who already have their consumers’ credit cards on file are already part way to offering full mobile payment services.

However, some merchants are putting off fixing broken NFC-enabled equipment because they are waiting to see whether the technology will be welcomed and used by consumers.

“It’s the chicken and the egg,” Mr. Stein said. “Consumers are going to have to believe that tapping is faster.”

Until consumers try it, they do not know.

IMobile3 released PassMarket Beacon Edition this week, which is the update of its PassMarket platform. The Beacon Edition will enable participating retailers to add gift card purchases and mobile payment passes to their existing loyalty and rewards programs.

As mobile payments gaining ground, retailers are looking to replicate successful mobile payment programs, such as the popular Starbucks’ one (see story).

Mobile payment providers need to be aware of stumbling blocks, according to Michael Boland, senior analyst and vice president of content at BIA/Kelsey, Chantilly, VA, who moderated the breakout session.

“In a lot of cases, it’s solutions in search of a problem,” he said. “How [consumers] pay for things is an entrenched habit.”

Final Take
Kari Jensen is staff writer on Mobile Commerce Daily, New York