Merchants and the Race for Mobile Payments

As consumers become more comfortable shopping on mobile devices, purchases conducted on smartphones and tablets are projected to soar 173 percent, from $52 billion annually today to $142 billion by 2019, according to Forrester.

Merchants looking to add alternative payment options to their websites have made PayPal their go-to partner in recent years. While PayPal is working hard to leverage its e-commerce clout to serve customers’ mobile checkout needs as well, powerful competitors have launched or are gaining ground with their own potentially disruptive fast payment options.

Tech titans like Apple and Google, credit card giants like Visa and MasterCard and ever-innovative e-commerce leader Amazon.com are doing everything in their considerable powers to knock PayPal off its alternative payments perch.

Merchants might be tempted to sit on the sidelines and wait to see who is left standing before deciding which mobile payment providers to partner with. That would be a mistake.

Streamlining the path to purchase and checkout process has been one of the key ways that e-tailers have been able to improve their customers’ online shopping experiences and drive conversions. Mobile consumers have come to expect the fastest, most seamless checkout experiences possible. They don't want to type their credit card numbers or shipping addresses into a small screen every time they shop a new site. They also never want to worry about the security of their data, which high-profile breaches at major retailers routinely call into question.

New alternate payment options promise to accelerate this process, and merchants should take a hard look at implementing them for several reasons. For one, they're very popular in Europe, making them crucial to any merchant looking to expand into that market. Alternate payment options are also beginning to bridge the gap between online and offline purchasing, making them particularly attractive to merchants with online and brick-and-mortar stores. But the real promise of alternative payments is their ability to help consumers over the long-standing mobile purchase barriers of convenience and security.

New alternative payment options seek to resolve both of these concerns. Consumers will be experimenting with all of them in a big way in 2015 and beyond, and merchants who want their business should do the same.

Google
Google Wallet was launched in 2011 as a convenient way for consumers to store their debit and credit cards and use them online or in-store through so-called "tap and go" technology using near field communication-enabled devices.

Initially, Google Wallet's audience was limited largely to Google fans purchasing apps for their Android devices. Some merchants have been hesitant to share their data with the search giant, but that seems to be changing.

The number of merchants featuring the "Buy With Google" button is growing rapidly, including such industry leaders as Toys"R"Us, 1-800-Flowers.com, Expedia, Airbnb and GNC.

Apple
Though late to the game, Apple is generating significant media buzz and consumer interest in its Apple Pay solution. The service allows users of the latest Apple mobile devices to quickly pay at retail and online locations using encryption, tokenization and TouchID technology.

Some industry watchers predict ApplePay will speed adoption of online and particularly in-store mobile payments technology. Others are skeptical the platform will enjoy wide adoption, noting that despite the success of the iPhone6, Apple's remains well behind Samsung and Nokia in the handheld market.

Nevertheless, the company claimed that more than 1 million credit cards were registered in the first three days of ApplePay's availability.

Visa
Visa Checkout offers an easy way to pay online, on any device, with just a few clicks. Shoppers need only enter a user name and password to complete the payment process — without needing to share their card details with retailers. The service is aimed at decreasing cart abandonment, especially on mobile devices.

Major retailers announced so far for the service include Neiman Marcus, Old Navy, Gap, Athleta and Staples.

MasterCard
MasterCard offers a similarly simple service through its MasterPass program, which stores consumers’ information in a single, secure location and allows them to use a single payment service across all devices. And, like Visa Checkout, MasterPass allows customers to use multiple cards, not just MasterCard.

While both have yet to achieve widespread adoption, Visa Checkout and MasterPass are trusted brands with established roles as payment enablers that will likely become popular with consumers. Major retailer partners for MasterPass include J.Crew, FTD and Major League Baseball.

Amazon
Launched in 2007, Amazon Payments allows shoppers to log into a participating retailer's site with their Amazon.com ID and arrange the same shipping details and payment information included in their Amazon accounts.

An increasing number of online retailers are adopting the service as a way to help customers leverage their Amazon account information to check out without needing to re-enter credit card numbers or shipping addresses. Users can also check out using the online retail giant's popular one-click option, and can track their transactions through their Amazon account.

2015 will be a year of profound experimentation and flux in the mobile payments arena. Retailers should consider several factors before deciding which providers to partner with, including the percentage of their customers using mobile devices. Those with brick-and-mortar stores need to consider that an increasing number of their customers will be expecting to not only interact with their mobile devices in-store, but be able to purchase goods through them as well.

While integrating multiple alternative payment options into your site can seem like a logistical headache, you should weigh your own inconvenience against those of customers, who, spurred by a wider array of mobile-optimized payment options, will expect mobile transactions to be faster and more seamless than ever before.

Ken Burke is the founder and executive chairman of MarketLive, an on-demand e-commerce platform and solutions provider. Ken can be reached at ken@marketlive.com.