If the past year is any indication, companies are betting big on in-store shopping. Apple, Android and Samsung all released mobile payment services and more and more stores invested in technology to fulfill their omnichannel aspirations of an integrated experience across all channels. Big retail players have added some impressive additions to their physical locations, from Sephora experimenting with augmented reality to Best Buy and Nordstrom offering curbside pickup.
This focus isn’t a surprising one: A report published by the International Council of Shopping Centers found that 78 percent of shoppers favor brick-and-mortar visits over ecommerce. Now, imagine if that money sitting in your Venmo account could be used to make a mobile payment at your favorite store. Here’s a look at why that might ultimately be the case.

Setting the Scene for In-Store Shopping

We may live in a world where nearly everything is available on Amazon, but we still crave in-person interactions with brands. That need translates to great potential for some unexpected retail players.
We’ve seen early-stage moves from PayPal. Earlier this year, the company, which is no stranger to online merchant-consumer payments, partnered with Macy’s to let shoppers pay with their account information in-store. While the decisions from both of these companies speak volumes about the changing state of payments, it’ll likely take some time for dedicated P2P services to transition away from their comfort zone and make a widespread brick-and-mortar impression as emerging alternative payments players.

The Motivation for P2P to Adapt

MasterCard recently released a study of global shopping habits, revealing that customers want stores to accept all the ways they may choose to pay—including mobile options. With widespread shopper openness to new payment types, the door is open for players beyond Apple, Android and Samsung to take the stage.
The most successful P2P payment offerings already have a strong presence on the phones of their dedicated user base, and many of those users have funds sitting in their user P2P platform accounts, waiting for an opportunity to pay someone back. The next step is for a user to go down the street to their favorite store and tap their phone to pay with a version of Venmo or Facebook Messenger that goes beyond its original use.
Suddenly, that unused money becomes an opportunity for both the consumer and the merchant.
Now, with Apple announcing plans to get into the P2P payments space, we have yet another sign that the future is bright for person-to-person transactions.

Achieving Scalability

It goes without saying that P2P payments services must overcome some challenges before transitioning to the brick-and-mortar mobile payments world, the biggest of those being scalability. While the likelihood of shopper adoption is a strong source of motivation for services like Venmo to expand in this way, scaling virtually is a far easier task than scaling in physical stores.
In addition to getting merchants on board with acceptance, P2P providers looking to expand their services will need to make sure the proper infrastructure is in place. Completing an in-store mobile transaction with a P2P account balance is far different from paying with a credit or debit card, and these services will need to accommodate purchases that exceed the amount in a user’s account.
Despite these hurdles, the willingness to accept payment types beyond credit cards and cash is on the rise, and we could see alternative payments players at the register within the next five years.

Bringing “Alternative” Into the Mainstream

For those still skeptical of P2P’s future in the mainstream payments world, looking at the history of other industries could inform the future of retail. For example, in 1998, it was near impossible to count the number of search engines Internet users could choose from. Back then, few would have guessed that Google would outshine the others and become a household name.
We’re in a similar trial-and-error phase with new payment methods: While a few key players will emerge, the stakes are high for those that succeed, providing extra motivation for some unexpected payment services to get into the game now. And while scalability is crucial, if P2P services want to move away from their original form, they will also face the challenge of incentivizing shoppers to move away from the mainstream swipe-to-pay methods they’re already familiar with.
The key to competing in a crowded space lies in a strategy both Apple Pay and Android Pay already have top-of-mind: loyalty and offers. If the Venmos, Snapchats and Facebook Messengers of the world want retailers to favor their payment methods over the services already installed on their phones, they’ll need to build relationships with those businesses and provide offers that are more enticing than the competitors are serving up. Without this extra incentive, shoppers will likely stick to the credit card or mobile payment methods they know.
In the end, any traction in the mobile and alternative payments space is a rising tide for all involved. If we can get consumers to expand their view of payments beyond the credit card, we’ll open the door for the future of payments innovation.
Do you think peer-to-peer payments will ultimately adapt for in-store shopping? Leave us a comment and let us know!
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