Differentiate with digital

Fixing the Mobile Shopping to NFC Payment Adoption Gap

Brendan Miller
Principal Analyst
March 3, 2016
NFC is Ready For Prime Time, but Merchants and Consumers are Standing By
Mobile in-store shopping hasn't translated into mobile in-store paying. Seventy-two percent of smartphone-owning US online adults have used their phone in-store as a "trusted advisor," to check prices, find product information, or locate an item, but meanwhile adoption rates of Apple Pay still hover around 5% for eligible transactions*.  In the past year, two market factors started to shape the next phase for mobile payments in-store. First, tech giants like Apple, Google, and Samsung released new NFC-based payment systems. Second, in an effort to avoid new fraud liability with the EMV liability shift, US retailers began implementing new EMV terminals that are also NFC ready. Yet despite consumers having the right technology in hand — and merchants now technically ready to use that technology for mobile payments in-store — consumers haven't changed their tried and true payment behavior.  
 
Merchants Need to Take The Reins
Merchants who have NFC can bridge the gap by being much more proactive in getting consumers to try "tap and pay" at the POS.  The mobile payment systems:Apple Pay, Android Pay, Samsung Pay and PayPal  have made strides to make the act of paying simple, but more needs to be done at the merchant to fully crack the convenience code.  Forrester has a framework called the Convenience Quotient**: to be fully adopted, any new product’s benefits have to be greater than its barriers to use.   Most merchants who have NFC still have not overcome the convenience quotient and therefore consumers default to their plastic card.  
 
Focus on a Better NFC Experience 
We do believe that the extra friction EMV transactions create will eventually drive some consumers to NFC, but the industry shouldn't rely solely on this line of thinking. eBusiness Professionals ultimately hold the keys to mobile NFC payment success, and should work internally and with their partners to overcome the NFC convenience quotient by doing three things:
  • Integrate your loyalty program with the mobile payment systems – eliminate the need for consumers to manually enter loyalty credentials or fumble with loyalty cards at the POS.
  • Configure the terminal application logic for debit and credit CDCVM – By properly configuring the terminal business application logic, the consumer no longer is tripped up by unnecessary prompts on the terminal, and the checkout experience overall is fast and convenient.
  • Execute Operationally – have an operational plan to continually train staff on emerging payment types, ensure there is POS signage (digital or decals) promoting new payment types,  and test small incentives such as a dedicated NFC checkout line to reinforce the convenience benefits of NFC.   
 
Read the full report: How US Merchants Should Unlock More Value From NFC Payments In 2016 – This report examines in detail how eBusiness executives should unlock new value from NFC and how to implement a successful NFC program.
 
*Source: Forrester's North American Consumer Technographics Retail Survey, 2015 – Apple Pay Adoption: Source: "New Apple Pay Adoption Numbers," Pymnts.com, October 26, 2015 (http://www.pymnts.com/news/2015/new-apple-pay-adoption-numbers/)
 
**To read more about the convenience code, please see the “Cracking The Convenience Code” report
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