In this second and last installation of our sit down with Jordan McKee, a Senior Analyst of Mobile Payments with 451 Research, we’ll dive into the payment trends that should be on your business’s radar.

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For businesses that have not yet made the investment in chip card acceptance or EMV technologies, what are they potentially missing out on?

Merchants that have yet to invest in EMV are taking on considerable amounts of risk. This risk takes multiple shapes, including elevated fraud levels as well as negative consumer perception and sentiment. No merchant should want the label as the only store on the block that has yet to implement a higher level of security.

Aside from risk, merchants are missing out on an opportunity to future proof their payments acceptance infrastructure. Most EMV terminals sold today are dual-interface, meaning they also accept contactless payments such as Apple Pay. Making an investment in EMV lays the foundation for future advancements on the payment presentment front.

Apple Pay, Android Pay, Samsung Pay – how important is it really for my company to accept these kinds of alternative payments? Are consumers really using these products?

Consumer adoption of mobile wallets remains in early innings but is poised to grow significantly. According to 451 Research's Global Mobile Forecast, NFC-based payments in the US grew from $1.4bn in 2014 to $5.2bn in 2015 and will crest $12bn by the end of this year. As merchants upgrade their point of sale infrastructure to EMV, they will be wise to invest in terminals compatible with NFC to facilitate the inevitable growth of mobile wallets.

Aside from these software and hardware-based mobile wallets, are there any other alternative payments my company should be planning for?

Merchants should consider implementing a loyalty program and allowing customers to complete purchases with rewards points. 451 Research finds more than half of smartphone owners are using reward program apps monthly or more frequently and 31% are using them at least weekly. Starbucks’ mobile loyalty program serves as the most prominent beacon of success, but examples are abounding across the QSR sector. Consumers have a growing penchant for collecting and redeeming rewards points for purchases both online and offline. Those merchants that can accommodate this demand will reap benefits in the form of heightened engagement and increased customer lifetime value.

There are so many different digital wallets, mobile loyalty platforms and integrated products out there. How does one keep track and determine the best solutions for my business?

The past 5 years have seen a dizzying array of developments in payment presentment and acceptance. For merchants, it is important to keep a finger on the pulse of these changes and assess how they may impact both customers and operations. As a starting point, merchants should discuss with their payments provider which innovations show the greatest potential for ROI. Merchants would also be wise to follow industry trade publications such as Mobile Payments Today and Digital Transactions Magazine to monitor developments. For larger merchants, conducting a “voice of the customer” survey to assess interest in and adoption of various digital commerce technologies will provide a strong indication of where bets should be placed.

Aside from basic payment processing, what kind of services or technologies should I be discussing with my payments provider?

A strong payments provider brings much more to the table than just processing services. Merchants should ask their provider what they can deliver in terms of customer engagement technologies; loyalty and stored-value solutions are just several of many tools that should be in your payment providers’ arsenal.

As the lines between the physical and virtual worlds blur, merchants should also learn about their providers’ omni-channel capabilities and which partners they have aligned with. Strong partners will have a compelling narrative around their ability to bridge the online and offline worlds.

And perhaps most importantly, merchants should have an honest, in-depth security conversation with their payments provider, discussing technologies such as P2PE and tokenization. After all, without strong security, investments in payments technologies provide little payoff.

What is the next big thing in payments?

With more than seven billion mobile connections globally, the opportunity for digital commerce is growing dramatically. Connectivity is working its way into automobiles, wearables and a host of other objects, shifting the conversation from the capability of the mobile device to the capability of the connected network. Any connected object holds the potential to be a vehicle for commerce, presenting an opportunity to significantly expand the acceptance network. Merchants should closely watch the intersection of IoT and payments, looking for chances to exploit new sales channels.

About Jordan McKee

Jordan McKee is a senior analyst on the 451 Mobility Research team, which was established in July 2014 with the integration of Yankee Group. His research examines the impact of mobility on the constituent components of the payments value chain. His key research areas include mobile point of sale (mPoS), mobile payment platforms, mobile customer engagement, emerging payment technologies (e.g., BLE, NFC, EMV) and virtual currencies.

​​Q&A with 451 Research’s Jordan McKee Part Two: Planning for Payments