In the United States, almost 22 percent of mobile purchases are made through digital wallets, like Apple Pay, with the projected mobile payment transaction value to reach $74 billion by 2017. As a result, many speculate that the end of the physical wallet is near, further strengthening the hype around mobile payment acceptance. With mobile payments estimated to account for nearly 25 percent of all U.S. online sales by 2017 according to eMarketer, ecommerce merchants must adopt the ability to accept transactions through mobile wallets.
It’s projected that mobile devices will account for 30 percent of global retail ecommerce spending by 2018. And, as revenue increased from mobile device purchases by 125 percent in the 4th quarter of 2014 according to Market Wired, ecommerce merchants must update payment options now to prevent the loss of customers. Among the four most popular mobile wallets are Android Pay, Visa Token Service, Apple Pay, and Bitcoin.
Each of the popular mobile payment methods hold their own set of benefits and setbacks, so it’s important to understand which will be the most appropriate for your online store.
What is Apple Pay?
Apple Pay simplifies paying in stores and within apps via IOS devices with a contactless, mobile payment option. Using the iPhone 6, iPad Air 2, iPad mini 3, and the Apple Watch, Apple Pay has security features built right into the device so payment transactions are simple, secure, and private.
Released in October 2014, Apple Pay was accepted at 200,000 locations the first month of release, but quickly expanded to 700,000 within 6 months, and is now expected to reach 2,000,000 locations by the end of its first year. Right now, it dominates the mobile payment infrastructure holding 42 percent of the market share. Partnered with more than 2,500 banks and the support of all major credit cards, the point of sale system delivers an incredibly organized and secure customer shopping experience.
User payment details are stored within the phone, then with the touch of a button, payments are sent within apps. Using a token based system, placing your finger on the Touch ID allows the transaction to go through, but payment and personal information are kept safe and secure in the event the phone is lost or stolen.
The actual credit card numbers are used within a unique Device Account Number, which is encrypted and stored within the chip on the ISO device. With transaction-specific dynamic security codes, a payment is process but the credit or debit card number is never shared with the merchant.
For businesses accepting Apple Pay it’s easy to set up to offer customers the preferred payment option that’s in high demand. If you’re already accepting credit and debit cards, simply contact your payment provider to begin offering the secure payment option, then let your customers know they can make payments with Apple Pay.
What is Android Pay?
Android Pay is the latest mobile wallet released by Google, which offers secure payment processing through Android Smartphone authentication. You’re able to pay at the store or through a mobile app with a token system similar to Apple Pay. Tokens replace the credit card numbers to protect data in the event of a security breach or the phone is stolen. The tokenization system allows customers to make secure payments by tapping the phone to enter the payment terminal, entering the passcode, and then the transaction is complete. In the future, it’s expected to use a fingerprint scanner for added security.
Android Pay is considered to be more user-friendly than Apple Pay with added incentives, like the ability to use reward points among card options that are offered by 3rd parties. Plus, it’s compatible with more devices than Apple Pay. While limited to the U.S., it will have a country by country roll out and will work anywhere Apple Pay is accepted, but it will take time before compatible payment terminals are widely available.
What are Visa Tokens?
In September 2014, Visa launched their innovative Token Service to create a unified platform to accept mobile and digital payments. With the growth of tap-and-pay payment options up by 151 percent, Visa Token Services offer a simple digital payment experience while protecting sensitive payment information. This payment option is said to drive online and mobile commerce with the same token system used with Apple Pay and Android Pay.
The Token Service launched late last year, but only began rolling out overseas early this year. It’s designed to support mobile payments from all major mobile platforms, unlike Android Pay and Apple Pay. With the Visa Token Service technology, it offers great customer protection and usage, while delivering easy processing and a cost effective solution. Visa Token secures all types of mobile payments and digital transactions for all major mobile devices, as well as Visa payWave and Visa Checkout.
What is Bitcoin?
Bitcoin is basically a digital form of currency that allows you to use peer-to-peer technology to make purchases without the use of banks. It’s an open-source that’s designed for the public with unique properties that have yet to be offered by other payment systems. Mobile payments are made by a simple scan and pay method, so there’s no need to swipe a card or type in a pin.
For merchants, Bitcoin provides a secure and affordable means to handle transactions with high cryptographic security. When customers make a payment, you receive the funds through the Bitcoin network with minimal fees for quicker transaction processing. The payments are irreversible and secure so merchants don’t face the prices associated with chargeback fraud.
Bitcoin is easily transferable for international payments without any physical location. The emerging market of new customers benefit from a multi-signature feature to authorize transactions to prevent fraud. Although Bitcoin requires no PCI compliance, it offers great fraud protection for businesses that accept credit cards and PayPal.
Which are right for your online store?
With 63 percent of consumers reporting to do more shopping from their mobile devices over the next couple of years, if you have an online store, you must adopt mobile payment technology.
To determine which mobile wallets are right for your store, start by reviewing your current demographic data, as well as the devices that are pulling in the most traffic. If any of your sales are based overseas, right now Android Pay won’t meet your needs until it gains more momentum and extends it’s international capabilities.
For online stores with a large amount of mobile traffic originating from IOS devices, Apple Pay makes sense, while large amounts of traffic from Android devices make Android Pay the smarter option. For online merchant who don’t want to deal with the hassle of PCI compliance, Bitcoin is the easy solution. The safest options are Visa Token System and Bitcoin because they will support just about any transaction; however, they aren’t as popular as Apple Pay or Android Pay.
Don’t feel limited to only choosing one or two. The more you implement, the more customers you’ll reach and engages as there’s clear evidence mobile wallets encourage customers to spend more money because it has removed the barriers between wanting and owning. All a customer has to do is make a few simple clicks on their phone and they’ve made a purchase.
As the world of shopping and marketing move more and more online, online retailers must adopt the latest trends and methods used to meet customer demands and expectations. Now, mobile payments are among the latest trend online merchants must accept. However, this is more than just a trend. It will become a way of life and the preferred payment option as technology progresses. You must begin to implement these features now to remain in competition with other online stores.
Sources:
“Apple Pay” Apple.com
“Android Pay” Android.com
“Visa Token Service” Usa.Visa.com
“Bitcoin for Business” Bitcoin.org
“Statistics about Mobile Payments” Statista
