This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.
January 2012 The Mobile Payment Opportunity: Get Paid Anytime Anywhere Payments are the next step for mobile and tablet shopping. According to Aberdeen's September 2011 Mobile and Tablet Shopping De-Mystified: Adoption & ROI Business Case report, after consumer adoption of mobile web (57%) and mobile email (40%), payment transactions over a mobile phone device (m-payments) were the mobile shopping component next most likely to be identified as essential, chosen by 40% of 300 qualified enterprises surveyed by Aberdeen (including 80 companies in retail and related industries). According to Aberdeen data cited in this report, even though m-payments are a recent technology innovation, they are expected to grow briskly as a consumer payment form factor within the next three years, due to the mobile / digital affinity of consumers. In the last three years, this industry has seen rapid ecosystem advancement in terms of commercial launches, advanced pilots, and new platforms / solutions. The m-payment ecosystem comprises merchants (retail, hospitality, restaurants etc.), financial institutions, handset manufacturers, payment infrastructure providers, and mobile network operators (MNOs). A slew of commercially-ready mobile payment systems, consumer mobile wallets, payment-ready handsets, and point-of-sale (POS) enabling tools have hit the market. In fact, according our latest survey conducted in December 2011 involving 75 companies, 56% possess an m-payments initiative at some stage of deployment or consideration. This report identifies the key drivers and challenges likely to shape m-payments at the merchant-level as a next step in the evolution of the payments ecosystem, from the perspectives of customer use, transaction volume, loyalty, and payment security. Current Market Adoption & Value Proposition From an end-consumer standpoint, m-payments (with or without Near-Field Communications (NFC) or mobile contactless payment technology) could be game-changing in alleviating traditional payment complexities such as check-out time and customer convenience at POS. From a banking perspective, m-payment is a new opportunity to expand both in-store and non-proximity payment transaction convenience beyond traditional payment acceptance boundaries. Figure 1 below indicates that 24% of companies have currently deployed m- payments related technologies and business processes. Another 50% have launched initiatives: a pilot program or a trial (12%); budgeted to start adoption within 12 months (20%); considering this technology (18%). Analyst Insight Aberdeens Insights provide the analyst perspective of the research as drawn from an aggregated view of the research surveys, interviews, and data analysis Mobile Payments Definition Aberdeen defines mobile payments as the ability for a consumer to fulfill payment transactions using a consumer-owned mobile or tablet device at a merchant or retail POS/check out location or elsewhere. Mobile payments technology includes but is not limited to the use of mobile contactless or near- field communications (NFC), short message service (SMS), payment sticker, mobile wallet, wireless application protocol (WAP), direct mobile billing, pre-paid, smart poster, and loyalty
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2011 Aberdeen Group. Telephone: 617 854 5200 www.aberdeen.com Fax: 617 723 7897 The general awareness of key consumer and merchant elements associated with this technology is also trending upwards. This survey indicates that 90% of companies are aware of this technology, compared to percent 80% of companies surveyed by Aberdeen in 2008 (see report) and 63% in 2007. The three biggest groups of companies that indicate high levels of awareness include: retailers, banks, and hospitality / restaurant companies. Figure 1: M-Payment Initiatives in the Market
Source: Aberdeen Group, December 2011 Mobile contactless or NFC payment is the technology of which respondents are most aware: 77% of respondents cite affinity towards NFC transactions, followed by mobile wallet, mobile web payments (WAP), and short messaging service (SMS)-based mobile transactions like the ones used for mobile money transfers. Awareness of NFC and Mobile Wallet is on the Rise An NFC-enabled phone transaction is provisioned with a payment application (i.e., credit or debit card) issued by the consumer's financial institution or bank. The application and payment account information are encrypted and loaded into a secure area in the phone. The phone uses built- in smart-card NFC technology to communicate with the merchant's contactless payment-capable POS system, similar to the contactless payment cards and devices in use today. Proximity mobile payments can be made at both attended POS locations (such as stores) and unattended locations (such as vending machines) that use the existing merchant payments infrastructure. NFC-enabled mobile phones can also support applications other than payments. Examples include coupons, ads and loyalty / rewards programs. 26% 18% 20% 12% 15% 9% 0% 5% 10% 15% 20% 25% 30% No completed or planned activity None yet, but considering it None yet, but budgeted to start within 12 months Pilot project launched Have deployed within 2 years Have deployed within the past 3 - 5 years Percent of Respondents n=75 Demographics Of the 75 responding retail organizations, demographics include the following: Job title: C-Level (20%); EVP / SVP / VP (11%); Director (17%); Manager (17%); Consultant (18%); other (17%) Department / function: Sales and Marketing (34%); IT (23%); Corporate Management (8%); Product Development (12%); Supply Chain / Logistics (6%); other (17%) Segment: Banking/Finance (24%); IT Consultants to End-Users (15%); Retail (15%); Payment Infrastructure (18%); Hospitality (6%); Food and Beverage (4%); and Other (18%) Geography: North America (46%); APAC region (19%) and EMEA (35%) Company size: Large enterprises (annual revenues above US $1 billion)- 31%; midsize enterprises (annual revenues between $50 million and $1 billion)- 31%; and small businesses (annual revenues of $50 million or
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2011 Aberdeen Group. Telephone: 617 854 5200 www.aberdeen.com Fax: 617 723 7897 The m-payment model that respondents were next most aware of was mobile wallet-based phone transactions. These transactions can be enabled using a native software application on the consumer's mobile phone device. Consumers register by providing their phone number and other information, and the payment provider sends them a personal identification number (PIN) via short message service (SMS). Mobile wallets can be enabled with or without NFC technology. A typical mobile wallet can be similar to an online wallet, including debit, credit, pre-paid, loyalty, and driver's license details of the consumer for use at merchant locations for myriad transactions. In addition to mobile NFC and wallet-based transactions, m-payments using mobile WAP and SMS-based mobile phone transactions also form part of the primary mobile payments model. Direct mobile billing (44% respondent awareness), mobile pre-paid (52% respondent awareness), and mobile gift cards (45% respondent awareness) are the other models in the m-payment ecosystem. Consumers can use direct mobile billing to make a purchase on an e-commerce website applying user authentication codes provided by the payment provider. The consumer's mobile phone account is then charged for the transaction. Figure 2: M-Payment Techniques or Methodologies Enterprises have heard about in the Past
Source: Aberdeen Group, December 2011 Payment and Loyalty at the Center of M-Payment Figure 3 below shows the functionalities being fulfilled by currently implemented m-payment programs within merchant and other related segments such as transit. As expected, 8 out of 10 enterprises selected payment transactions as a top functionality. However, mobile wallet functions and mobile loyalty programs are starting to become a preferred extensible part of the overall m-payments model; nearly 3 out of 10 59% 62% 75% 77% 0% 20% 40% 60% 80% 100% SMS-based mobile phone transactions Mobile web payments (WAP) Mobile wallet-based phone transactions Mobile contactless or NFC - enabled mobile transactions Percent of Respondents n=75 "For us, the top two challenges associated with mobile payments are customer adoption and staff training." ~ Brett Lowe, eMarketing Manager, Shoprite The Mobile Payment Opportunity: Get Paid Anytime Anywhere Page 4
2011 Aberdeen Group. Telephone: 617 854 5200 www.aberdeen.com Fax: 617 723 7897 enterprises selected mobile wallet as a top functionality. Merchants and related enterprises are turning toward a more holistic payment experience for two reasons: first, the convenience of the mobile phone device as a viable payment option for consumers. Second, merchants want to add the value associated with the use of coupons, loyalty programs, and gift cards within the same experience or transaction. Could this re-define the way consumers interact with brands or consumer services? For merchants and other consumer service companies m-payments could be game-changing, as they have always struggled to provide an all-in-one tool for payments and loyalty, other than private-label credit cards, which are currently used by only 16% of merchants. Will this change the way loyalty programs are conducted on a day-to-day basis? A resounding- Yes! Figure 3: Current Functions Fulfilled by M-Payment Programs
Source: Aberdeen Group, December 2011 POS and Cross-Channel Customer Connectivity M-payment has cross-channel (store, e-commerce, call center etc.) implications for merchants who accept such payments, banks who act as issuers of these payment options, MNOs, and payment infrastructure providers. Besides the value of e-commerce for enabling Mobile WAP transactions, a POS system or register in the store and un-attended terminals can be a destination for mobile phone transactions. As a result, introducing m- payment technologies at the store POS is top of mind for merchants (retailers, hospitality, and restaurant companies) and banks (see figure 4 below).
22% 27% 29% 84% 0% 20% 40% 60% 80% 100% Issuance of loyalty program Acceptance of loyalty program Mobile wallet functions (i.e., driver's license, payment cards, loyalty programs, coupons, and gift cards) Payment transactions Percent of Respondents n=75 "The key is figuring out PCI implications and franchisee investment areas for mobile payments growth within our organization." ~ Vice-President, Large U.S. Based Pizza Restaurant Chain The Mobile Payment Opportunity: Get Paid Anytime Anywhere Page 5
2011 Aberdeen Group. Telephone: 617 854 5200 www.aberdeen.com Fax: 617 723 7897 Figure 4: Top Two Current POS Payment Improvements Being Considered by Merchants
Source: Aberdeen Group, December 2011 When asked about the top two POS payment-related improvements they are considering, 38% of respondents rate m-payment right on the top of the wish-list, followed by mobile coupons (22%) and contactless payment systems (19%). An astounding 61% of banks and financial institutions rank m- payments as the top priority for payment acceptance improvements. M-payments are not a buzzword anymore. This payment form factor is emerging as a key part of the strategic technology and business agenda within the merchant and banking space. Converting the current POS environment to a mobile payment-ready workflow requires merchants and banks to consider some payment acceptance infrastructure upgrades. These upgrades are not substantial, but may be required in areas like POS payment software, NFC-payment reader or pin-pads. Current Business Pressures So why all the hoopla about m-payment, and what are its implications moving forward? To a certain extent the answer lies in the business pressures, actions, capabilities, and technology enablers covered in the next following sections of this report. The main driver leading end-users toward payment innovation areas like m- payment is customer convenience (see figure 5). When talking about traditional debit, credit, pre-paid or loyalty at point-of-service, 33% of merchants list grappling with long and complicated customer transaction time in stores as one of their top two business pressures (as seen in Aberdeen's March 2011 The Customer Connected Store: 2011 Store Operations Automation Best Practices benchmark report). Transaction complexity issues 11% 14% 19% 22% 38% 0% 10% 20% 30% 40% EMV payment acceptance Mobile handhelds for in-store functions Contactless payment systems Mobile coupons Mobile payment Percent of Respondents n=75 "We deployed an m-payment initiative about two years back. We do believe that the merchants will drive adoption. We are focused on ensuring privacy, security, and software upgrade/implementation elements." ~ Vice-President, Large North American Bank The Mobile Payment Opportunity: Get Paid Anytime Anywhere Page 6
2011 Aberdeen Group. Telephone: 617 854 5200 www.aberdeen.com Fax: 617 723 7897 extend to any point-of-service across channels. Six out of 10 enterprises indicate that they are under pressure to improve customer convenience. Merchants, banks, and consumer service organizations cannot afford to be oblivious to the drastic shifts in customer product search, buying and payment behavior. The word- DIGITAL- is an integral part of shifts in customer behavior at every customer touch point, including payment. In the age of digital and personalized consumerism, merchants, banks, and consumer service organizations must constantly seek and provide easy, fast, personable, and trendy payment experiences, ultimately contributing to the overall consumer experience and satisfaction. The risk of not doing so, or of being late in the game, is lost sales opportunity and competitive disadvantage. Therefore, the pressure to respond to the customer's digital affinity via m-payments has become imperative for a third of enterprises. Figure 5: What Are the Top Two Pressures Driving Your Company to Focus Resources on Mobile Payments?
Source: Aberdeen Group, December 2011 Current Strategic Actions As a result of the above pressures, the top two strategic actions for nearly 6 out 10 enterprises relate to advanced discovery (see Figure 6) to determine the cost-benefit of m-payment. These companies are trying to comprehend the software and hardware implications of payment infrastructure change management. Just as with the adoption of card-based contactless payment systems nearly a decade ago, m-payment is likely to undergo similar scrutiny in terms of cost and implementation standards from retail, hospitality, and transit companies. However, the transition is likely to be less challenging due to the experience of contactless deployments, recently concluded and ongoing mobile NFC pilots, and other commercial mobile payment applications deployments in Europe, and Asia-Pacific regions. 24% 28% 33% 61% 0% 10% 20% 30% 40% 50% 60% 70% Desire to be a market leader Need to improve customer retention and loyalty Desire to take advantage of customer's mobile phone or digital affinity Need for greater consumer convenience Percent of Respondents n=75 The Mobile Payment Opportunity: Get Paid Anytime Anywhere Page 7
2011 Aberdeen Group. Telephone: 617 854 5200 www.aberdeen.com Fax: 617 723 7897 Using external services to help implement this new payment technology is the third most commonly cited strategic action, reported by almost a third (27%) of enterprises. Our data shows that when it comes to the use of external services, respondents are most likely to consider the following entities within the next 12-24 months: credit associations (53%), mobile payment solutions/service provider (36%), bank or another financial institution (31%), payment processor (29%), and MNO (26%). Several external entities already impact the growth and acceptance of m-payments, and will continue to do so in the future. This is both good and bad news, as merchants and other enterprise end-users at some stage tend to expect scalability, ownership, and unbridled extensibility for their POS payment applications. The above entities will have to address these end-user challenges now and in the future. Figure 6: Top Two Strategic Actions Relative to the Use and Adoption of Mobile Payments
Source: Aberdeen Group, December 2011 Current & Planned Capabilities for M-Payments To prime m-payment strategies for actual execution, enterprises are using capabilities or competencies related to process, knowledge, technology, and organizational factors. Due to the fact that m-payment is recent development (24% of respondents have had initiatives for no more than five years), many of the top capabilities cited in Figure 7 are being embraced on average by a fourth of companies. The top few are of crucial importance. First, executive buy-in and an internal champion are required for payment technology innovation, as 60% of companies have a legacy payment technology infrastructure (five years or more). Executive buy-in and support is needed for any major additions or changes to the current payment form factors, software, processing, gateway or other major infrastructure requirements like payment data storage, security, and network management. 26% 27% 29% 30% 24% 25% 26% 27% 28% 29% 30% 31% Upgrade technical infrastructure to enable future implementation Use external services to help implement the technology Understand the software and hardware implications Assess cost-benefit aspects of the technology Percent of Respondents n=75 "The provision mobile- enabled point of sale solutions is important to us. We are very keen to enable mobile payments but will need our POS providers to implement the solutions."
~ Lis Miller, CFO, DryGreen, Australia The Mobile Payment Opportunity: Get Paid Anytime Anywhere Page 8
2011 Aberdeen Group. Telephone: 617 854 5200 www.aberdeen.com Fax: 617 723 7897 Conversations with end-users in retail, restaurant, and transit companies reveal that executive support is a prerequisite for m-payment innovation. Change management functions and direct design / development involving internal IT teams is another capability imperative for any POS change. Large and mid-size retail, as well as restaurant enterprises, operate sizeable POS teams that manage day-to-day system performance, upgrades, data security, and payment innovation. Figure 7: Current Capabilities
Source: Aberdeen Group, December 2011 The top planned capability for the next two years for 55% of enterprises relates to the application of mobile payment industry standards for upgrades and deployments. In the last two years, the industry stakeholders (FIs, Banks, MNOs, Industry Associations, and Solution Providers) have attempted to create mobile payment blueprints (i.e. ARTS and others in Europe). However, this industry may lack a common minimum program comprising of a cross-country code for uniform deployment, services, security, and maintenance / support standards. M-payment standards vary between early adopters like Japan and South Korea, next-wave adopters like Europe, North America, and even fast-track adopters such as India and China. In several cases, the standards are driven by unique country-specific mobile-centric and payment-related regulatory requirements, and other unique market conditions associated with consumer data, including mobile consumer data and m-payment opt-in. One bright spot is that this industry and ecosystem continues to address the standards-related challenges associated with market-ready solutions and the acceptance for open technology / architecture requirements. 21% 22% 25% 25% 28% 0% 5% 10% 15% 20% 25% 30% Ability to review mobile payment technology performance Ability to upgrade POS system and payment data infrastructure Ability to develop knowledge within the design team Executive-level mandate or established internal champion Senior management support for payment technology upgrade Percent of Respondents n=75 The Mobile Payment Opportunity: Get Paid Anytime Anywhere Page 9
Source: Aberdeen Group, December 2011 The second highest planned capability is related to the use of mobile payment data for business intelligence (BI) purposes. This capability hinges on unique and relatively new mobile BI models adopted by individual enterprises. For instance, 42% of merchants plan to adopt mobile BI capabilities--however, including m-payments requires a separate mobile-POS integration and data separation layer for daily data analysis. The value of m-payments data for customer insights, traffic, conversion, and revenue forecasting purposes cannot be debated. However, companies must involve the right partner to explore these advanced capabilities. A key success factor is to build m-payment data intelligence into the initial m- payment deployment model framework. Current & Planned Capabilities for M-Payments Figure 9 highlights the current technology enablers that form part of the m- payments technology ecosystem. Due to recent evolution in the mobile NFC technology ecosystem, usage and adoption are low (on average less than 10% of respondents) for mobile NFC handset readers, payment pin- pads, mobile contactless stickers, over-the-air provisioning software, and NFC-capable POS terminals. Mobile wallet adoption is in the same vicinity. However, enterprises including merchants, restaurants, and other consumer service companies show greater adoption of secure payment card data management, also known as payment card industry data security standards (PCI DSS) compliance, which is capable of handling m-payment transactions. Also evident in Figure 9, due to earlier evolution, mobile WAP, and SMS- based mobile transactions such as the ones used for mobile money transfers have seen higher adoption compared to technology that supports NFC- based transactions. Meanwhile, 16% of companies use a relatively new entrant: 2-D bar code scanning technology for mobile phones, which can 51% 52% 52% 54% 55% 49% 50% 51% 52% 53% 54% 55% 56% Ability to review mobile payment technology performance Ability to initiate a pilot program for mobile payment trials Ability to inform employees to prompt usage of mobile payments Ability to use mobile payment data into business intelligence Ability to apply industry standards for mobile payments Percent of Respondents n=75 The Mobile Payment Opportunity: Get Paid Anytime Anywhere Page 10
2011 Aberdeen Group. Telephone: 617 854 5200 www.aberdeen.com Fax: 617 723 7897 read coupon, multi-channel promotions, and smart poster applications. Finally, 18% of merchants indicate current use of digital bar-code scan and print solutions. Figure 9: Current Enablers
Source: Aberdeen Group, December 2011 Planned adoption of m-payment ecosystem technologies is far rosier than current adoption. Figure 10 below indicates the strong planned adoption trend among companies as they continue to familiarize themselves with commercially-ready m-payment options via financial institutions, trusted service managers, and external third-party service or solution providers. Mobile wallet and loyalty are on top of the wish-list, followed by mobile NFC or contactless payment requirements like NFC readers and pin-pads, and NFC-capable POS terminals. The other models for m-payments, such as mobile WAP, SMS-based mobile transactions, smart poster applications, and mobile gift cards, also find favor among around half the survey respondents. 16% 16% 23% 32% 0% 5% 10% 15% 20% 25% 30% 35% Mobile web payments 2-D bar-code scanning technology for the mobile phone Short message service Secure payment card data management Percent of Respondents n=75 The Mobile Payment Opportunity: Get Paid Anytime Anywhere Page 11
Source: Aberdeen Group, December 2011 Overall, technologies supporting NFC or mobile contactless payment continue to emerge as "game-changers," as they can support POS payments, unattended payments, mobile wallet, loyalty apps, and even bill payment. In fact, 47% of the survey respondents contend that NFC will be the "killer" application in the future, provided its market availability is improved not only on the retail side but also on the buyer side. This survey also shows that merchants, MNOs, and banks are considered the troika of entities that can further NFC implementation in the industry. Figure 11: Who should trigger the NFC implementation?
Source: Aberdeen Group, December 2011 46% 53% 53% 46% 55% 57% 58% 60% 60% 35% 45% 55% 65% Mobile Short message service payments Mobile gift card application Smart advertisement or poster application Mobile web payments (WAP) NFC-capable contactless POS terminal Mobile contactless (NFC-ready) pin-pads Mobile contactless NFC handset readers Mobile loyalty software application Mobile wallet software application Percent of Respondents n=75 6% 9% 9% 20% 23% 33% 0% 5% 10% 15% 20% 25% 30% 35% Public transport systems Infrastructure providers Software developers Banks Mobile network operators Merchants Percent of Respondents n=75 The Mobile Payment Opportunity: Get Paid Anytime Anywhere Page 12
2011 Aberdeen Group. Telephone: 617 854 5200 www.aberdeen.com Fax: 617 723 7897 Security and payment fraud concerns are potential inhibitors to m-payment technologies. Four years into this research, security concerns still come up from respondents. For enterprises adopting m-payments, security is not just about safeguarding or compliance with PCI DSS, but protecting against a growing number of mobile data and payment security threats. Mobile payments data and consumer liability need the same security protection and the same structure of data governance as card based payments. As stated in previous Aberdeen research on this topic (report cited on page 2), "data breaches emanating out of lost or stolen mobile devices are the biggest concern for merchants. Some of these concerns are unfounded due to security parameters such as liability coverage provided by financial institutions and several levels of data encryption followed by mobile network operators and software application providers." Another factor that may contribute to the concerns around mobile payment security is the general lack of awareness among merchants about the secure transaction environment for mobile payments, both for NFC and mobile wallet related applications. Either way, the mobile payments ecosystem will have to address security concerns by providing demonstrable evidence of data security during initial deployments and pilot programs. Figure 12: Two Security Factors of Most Concern for the Adoption of Mobile Payment Systems
Source: Aberdeen Group, December 2011 Case in Point A specialty retailer of women's fashion apparel and accessories, including pants, jackets, blouses, handbags and jewelry, sells branded items on an exclusive basis through its network of a few hundred retail stores in 45 states and its website. The company has revenue in excess of 1 billion dollars, and is vertically integrated throughout its value chain from design 23% 27% 40% 47% 0% 10% 20% 30% 40% 50% Vulnerability of air interface between the consumer device and POS terminals Lack of data security features Lack of a strong payment verification guidelines Mobile phone is lost or stolen Percent of Respondents n=75 The Mobile Payment Opportunity: Get Paid Anytime Anywhere Page 13
2011 Aberdeen Group. Telephone: 617 854 5200 www.aberdeen.com Fax: 617 723 7897 and manufacture to its various retail channels, including store and e- commerce / mobile. Like many companies, this retailer has been investing in mobile commerce in recent years, and has faced some growing pains. In March of 2011, the company launched a mobile shopping site for its retail customers. Immediately, the company was receiving thousands off hits per day and thousands of additional orders per week. This served to place even greater pressure on their supply chain and inventory management practices. Also, it required more emphasis on maintaining a common shopping experience among all customers. We knew we were on to something, but we didnt anticipate the very strong market reaction to our launch. We had to quickly take steps to maintain our level of service, explained a Vice- President of IT at the company. The company is taking steps streamline inventory management processes to maintain customer service levels and to promote customer loyalty among their new mobile customer base. We have plans to deliver several follow- on releases of the mobile application before the holiday in an effort to enhance the value of the site. Our Mobile Shopping website will tie into our real-time inventory and ordering, with in-store availability, the Vice- President said. Going forward, we will continue to evaluate customer response and survey results and plan to what we hear." Understanding and improving the mobile shopping experience is only part of the solution. Seamlessly and securely handling mobile payments can prove a difficult challenge for retailers, who must stay current as the mobile payment market (and it support technology) change. While we have been accepting contactless payments for 3 years, we are always looking into ways to improve. Currently looking at a mobile wallet application provider, which is just a 'branding' of our existing contactless card program, explained the Vice-President of IT at the company. The infrastructure for mobile payments is still evolving, and its final shape has yet to be determined. As of now, banks cant break out contactless from other credit card transactions, and wallet transactions looks like any other contactless transaction. In the end, even this branded -mobile wallet may only have a short lifespan as true NFC evolves and hardware needs upgrading, the Vice-President said. Key Takeaways From an end-consumer standpoint, m-payment (with or without Near-Field Communications (NFC) or mobile contactless payment technology) could change the game by alleviating traditional payment complexities like long check-out times and making the POS more convenient . From a banking perspective, m-payment is an opportunity to expand both in-store and non- proximity payment transaction convenience beyond traditional payment boundaries. The promise of m-payments technology is undeniable; however, several questions must be addressed: 1. If NFC is game-changing and the future killer application, then why are respondents concerned about the market availability of NFC-ready handsets, peripherals, etc., despite progress on several fronts, including The Mobile Payment Opportunity: Get Paid Anytime Anywhere Page 14
2011 Aberdeen Group. Telephone: 617 854 5200 www.aberdeen.com Fax: 617 723 7897 recent large orders from mobile handset manufacturers such as RIM, Samsung, and others? 2. Can merchants, banks, and MNOs lead mobile NFC adoption without the support and usage desire of a key ecosystem link- the consumer? 3. Why is security still a concern for so many respondents? Can the industry establish uniform guidelines for m-payment security and data intelligence? 4. Can merchant adoption of m-payments be triggered by consumer demand, legacy POS overhaul cycles, EMV (Europay, MasterCard, Visa) payment acceptance or a combination of these factors? The actions below can help end-users make a smooth transition toward an m-payments model. Develop a comprehensive roadmap and business justification via consumer and market research for considering key customer touch point advancements. Include within the due diligence process advanced digital and mobile payment models like NFC transactions, mobile wallet, mobile web payments (WAP), direct mobile billing, and short messaging service (SMS)-based mobile transactions. Consider timely enhancements to POS (every two years) in the areas of traditional card-based payments, advanced payments, integrated marketing functions such as loyalty that enables improved customer-centricity and transaction speed. Prepare a digital POS and payments migration path to adopt the hardware, software, security and services necessary to enable new payment methods such as proximity cross-channel payments, and cross-channel marketing functions such as digital couponing and loyalty. Develop an internal knowledge culture for effective transaction data management, security, and business intelligence strategies governing payment experience models, but, more importantly, prepare for new payment methods such as mobile contactless and wallet applications. For more information on this or other research topics, please visit www.aberdeen.com
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Related Research The Customer Connected Store: 2011 Store Operations Automation Best Practices; March 2011 New Customer Service Strategies in Retail: The Reign of Kiosks and Self- Service?; March 2010 Mobile and Tablet Shopping Demystified: Adoption and the ROI Business Case; September 2011 Customer Centric-Retailing 101Customer Intelligence and Engagement Strategies; October 2011 Author: Sahir Anand, Vice-President & Research Group Director; (sahir.anand@aberdeen.com)
For more than two decades, Aberdeen's research has been helping corporations worldwide become Best-in-Class. Having benchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provide organizations with the facts that matter the facts that enable companies to get ahead and drive results. That's why our research is relied on by more than 2.5 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% of the Technology 500. As a Harte-Hanks Company, Aberdeens research provides insight and analysis to the Harte-Hanks community of local, regional, national and international marketing executives. Combined, we help our customers leverage the power of insight to deliver innovative multichannel marketing programs that drive business-changing results. For additional information, visit Aberdeen http://www.aberdeen.com or call (617) 854-5200, or to learn more about Harte-Hanks, call (800) 456-9748 or go to http://www.harte-hanks.com. This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc. (2011a)
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Featured Underwriters This research report was made possible, in part, with the financial support of our underwriters. These individuals and organizations share Aberdeens vision of bringing fact based research to corporations worldwide at little or no cost. Underwriters have no editorial or research rights, and the facts and analysis of this report remain an exclusive production and product of Aberdeen Group. Solution providers recognized as underwriters were solicited after the fact and had no substantive influence on the direction of this report. Their sponsorship has made it possible for Aberdeen Group to make these findings available to readers at no charge.
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