Jaymee Johnson has been working for years on advancing Softcard, the mobile payments system and mobile wallet formerly known as Isis. Like every mobile payments system, with the exception of the one created by Starbucks Corp. for its own coffee shops, Softcard has yet to catch on with U.S. consumers.
But Johnson says the landscape changed last month when Apple Inc. debuted its Apple Pay mobile payments system that works with the Apple Passbook mobile wallet on Apple’s newly released iPhone 6 and 6 Plus devices. Apple, Softcard and some other mobile payments systems use the same mechanism for enabling smartphones and store payment terminals to exchange data—as Near Field Communication (NFC), a wireless networking technology that’s been highly touted for a decade but never widely deployed in the United States. Johnson, head of marketing at Softcard, says while Softcard and others have labored for years trying to advance mobile payments, it took a company with the clout and cache of Apple to bring mobile payments into the vernacular of the average U.S. consumer and give the concept of paying in stores with a mobile phone a shot at mainstream acceptance.
“Apple Pay eliminates any excuse among all players in the mobile payments ecosystem to jump in,” Johnson says. “But payments are just table stakes. We’ll be spending 2015 building out loyalty, special offers and other mobile wallet components.”
Johnson spoke with Internet Retailer at the 2014 Money 20/20 conference this week in Las Vegas, where it was hard to escape the words “Apple Pay.”
“I was impressed not just because it was innovative but because of Apple’s commitment to service and quality,” said Kenneth Chenault, CEO of American Express, during his presentation as one of the Money 20/20 keynote speakers. American Express is one of the major card brands, along with Visa and MasterCard, that are collaborating with Apple on Apple Pay. “It was thoughtful and diligent how Apple approached payments, so it was not a hard call at all to partner. We want to be wherever our customers want to be.”
With regard to the potential mobile payments have to change the payments landscape, Chenault added, “I’m not scared of people changing. We will continue to innovate.” He said this will especially be the case as online and physical commerce converge.
And that is exactly what 800-store chain retailer Pep Boys is trying to bring about. While it is preparing to accept Apple Pay in its stores (it has NFC-enabled point-of-sale terminals in place), it has begun marketing to its iPhone-toting customers with e-mail coupons that feature an Add To Passbook button. When a customer presses the button while viewing an e-mail on her iPhone, the iPhone saves the coupon in her Passbook mobile wallet, explained Ron Stoupa, chief marketing officer at Pep Boys, which uses mobile marketing technology and services firm Vibes. Both firms presented in the Money 20/20 session titled “The Marketer’s Wallet: Making Money with Passbook and Google Wallet.”
“Gen Y’ers are driving us to mobile, they’re demanding it,” said Stoupa, who added that in 2015 mobile traffic to PepBoys.com will exceed 50%. “At the beginning of 2014 we were a desktop company. Now we’re thinking mobile-first.” The retailer recently launched an enhanced version of its mobile commerce web site.
Vibes said it has conducted 350 mobile marketing campaigns, many with Passbook integration. Combining results for those campaigns, 70% of consumers saved an offer to Passbook, Passbook campaigns offer conversion rates 64% higher than rates for campaigns with mobile web-based coupons, and retailers that have run Passbook campaigns have seen a 26% increase in average order value when offers are redeemed through Passbook compared with web coupons.
In a session titled “Stores Unplugged: Mobile Point of Sale,” three retail executives, one restaurant executive and a mobile payments analyst discussed the future of using mobile devices in stores and restaurants to accept payments, otherwise known as mobile POS. All agreed that mobile POS has to be about more than just payments to be worthwhile and to succeed. They said sales associates armed with mobile devices to help customers check out also must know how to use those devices to help customers find what they’re looking for in the first place, and then be able to dive deeply into online resources to inform customers about product details and more.
“We’ve put a lot of resources around mobile POS, but POS is just one piece of the customer journey in-store,” said Jeff Klonowski, senior manager of digital retail and mobile at sporting apparel and accessories chain retailer REI, No. 69 in the Internet Retailer Top 500 Guide. “How do we help our associates drive the customer experience?” He said because of the types of products REI sells, REI may have more use for such mobile-assisted in-store selling than more “transactional retailers” like Wal-Mart, where most products do not require much explanation.
Malcolm Nunes, senior manager of credit services at The Home Depot Inc., No. 16 in the Top 500 Guide, said he’s not so sure mobile POS will ever be dominant at a big box chain like his. Further, mobile POS presents a challenge, he said. “What about taking cash?” Nunes asked. “Associates in the aisles can’t do that.”
Thad Peterson, senior analyst at mobile payments research and consulting firm Aite Group, chimed in, “Since the beginning of time, no form of currency ever invented has stopped being used.”
OK, maybe no one uses sea shells to pay anymore. Mankind has evolved from sea shells to smartphones, and now that Apple has put the spotlight on mobile payments and stoked the imaginations of the public and the media, a growing number of retailers are giving serious thought to the role mobile devices can play in-store.
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