An Emerging Cashless Society Means More Data for Retailers
This week we welcome an exclusive guest article , submitted to Analytics Training by a budding trends and report blogger, ‘The Future Thinker’. The article reports on how cashless payments are on a rise and consumers are moving towards shopping online through smartphones.
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As more and more people begin to use their smartphones for shopping, mobile payments appear to be one of the things that consumers are highly thankful for today. In a quarterly index report by Adyen, it revealed that online payments via mobile devices accounted for 27.2% of the overall online payments made in the first quarter of 2015 alone, where iOS payments saw 65% of the market share while Android claimed 34.9%. Is this the start of the new era of a cashless society?
Definition of terms
Before we delve further, here’s some information about mobile ePayments:
1. Mobile payment means any payment transaction that is initiated on a mobile device (cell phone, smartphone, tablet computer, or a wearable).
2. There are three types of mobile payments. Firstly, the person-to-person money transfers, which include non-commercial (a consumer to another consumer) and commercial payments (a consumer to a small-scale merchant like a tradesman). Secondly, the goods and/or services payments, where the consumer pays for the item or service they have purchased via their mobile devices. Lastly, there’s the point of sale (POS), where the consumer pays for goods and/or services at physical locations using their smartphones.
3. There are several technologies used for mobile payment currently, which include a near field communication (NFC) chip, radio frequency identification (RFID), and a 2D barcode, which contains more information than a conventional linear barcode.
Built-in ePayments on smartphones
With the rise in mobile payments, tech companies have released their latest set of smartphones with built-in ePayment apps and hardware. According to the information released by O2, the new LG G4 is pre-built with a NFC chipset that allows the handset to make payments with a simple tap or swipe on NFC payment terminals at various physical stores. It works with various digital apps such as Google Wallet, Lemon Wallet, and many more.
Meanwhile, many wearables are also equipped with the same technology. Apple has released their Apple Watch recently with the company’s propriety contactless payment system. Apple Pay allows the user to purchase items securely by a single tap on their device. Other mobile companies are working on producing their own propriety mobile payment systems, or they are actively looking to https://www.fastcompany.com/3007281/industries-watch/partnerships-provide-muscle-mobile-payments-war partner with current ePayment companies to include their payment systems on their upcoming handsets.
Future of cashless payments
While Apple Pay on the Apple Watch has changed the landscape of ePayments, there are other innovative ways on how experts foresee mobile payments growing in the future. Recently, US President Barack Obama said in an interview that he supports the effort to abolish the American penny, but experts predict all physical coins and dollars could soon be rendered obsolete due to the popularity of ePayments. If it’s successful in the US, many predict that more countries will try and move away from producing expensive paper money and replace it with ePayments. The current trend in mobile payments could potentially lead to a cashless, cardless, and paperless society in the future.
How does it really work? Cashless payments can be in a form of NFC (near field communication) apparent on most premium smartphones and wearables or via an external accessory attached to a mobile device to get payment. There are also some that require no physical connection to another device, but can wirelessly pay via a single application. All requires credit card data to work. Users can either tap their NFC-enabled smartphone to an NFC payment terminal, swipe their credit card in an ePayment mobile accessory, or wirelessly pay items via an application on their mobile devices.
So how does this impact online retailers? Well, at the very least they we know that cashless payments will generate a huge amount of data; valuable data, that savvy data scientists will analyze and derive even more valuable insights from, that could revolutionize the organization. (Read our previous post about it). Whatever methods it may be, one thing is certain here – electronic data have changed the way we transact and it will soon completely change the way we live in this data, tech-driven world. And to go even further, cashless societies will generate the need for a whole new breed of number loving, data crunching, scientists.
If the said processes are secure, it’s no longer surprising that businesses will see this as their go-to procedure. However, like anything, mobile payments will take time to be trusted and adopted on a large scale. How do you foresee mobile payments growing and expanding in the future?
Suggested Read:
Can Retailers Leverage In-store Shopping Using Mobile Commerce?
