• By Jay Shedd

Hard, cold. . .  apps? Are mobile payments the next big thing in commerce?

“Will you be paying with cash or card?” This phrase is familiar to consumers. One day, though, this question might become obsolete as mobile commerce takes over and our smartphone becomes our debit card, rewards card and wallet.

In general, the world is less reliant on cash. For many years, debit and credit cards have been the preferred payment method among consumers because of the convenience it offers.

If convenience is the driving factor for consumers choosing a payment method, in-store mobile payments using apps and services like Apple Pay, Google Pay, Venmo or Samsung Pay are very convenient.

Adopting mobile payments makes sense, considering the proliferation of smartphones. It is integrated into something we all already carry. After all, you may not go back home to get your wallet, but you will go back home to get your phone. And if you have smart watch, you wouldn’t even have to get your smartphone from your pocket. You just wave your wrist over the payment terminal.

In addition to being easy and convenient, mobile payments are more secure than other forms of payments. Services like Apple Pay and Google Pay transmit a token of data using Near Field Communication, so the cashier never sees the customer’s card or bank, protecting both consumer and retailer. Plus, credit card numbers and transaction histories are not kept on the Apple Pay or Google Pay servers, protecting against data breaches.

Deutsche Bank predicts that by 2025, e-Wallets will be the second most preferred method of payment after credit cards, and the most preferred among millennials. Consumers in China and Southeast Asia, in particular, readily flocked to mobile payments.

Are we likely to see mobile payments become a major payment method in the Marianas?

The infrastructure is definitely here. The data network to ensure quick and secure payments from both the consumer and retailer sides are in place. A majority of island residents already have a smartphone and carry with them at all times.

There are local businesses that have embraced this technology, but it’s not widespread. And that’s not necessarily a bad thing. We’re not behind. Though the U.S. is the launch pad for innovators like Apple Pay and Google Pay, Americans are not adopting the payment method as quickly as consumers in China and Southeast Asia; the same with European consumers.

However, industry experts predict that the value of mobile transactions overall in the U.S. are expected to grow steadily over the next three years, increasing from about $99 billion in 2019 to $220 billion in 2023. This includes peer-to-peer payments and online shopping.

The younger generations – millennials and Gen Z – are more likely to be knowledgeable about mobile payments and to actually use it. For older generations, physical payment is ingrained.

There appears to be a classic chicken or egg conundrum. Which comes first? Customer demand or the availability of the service? If we build it, will they come?

On one hand, all the latest smartphones have the capability to make mobile payments once the app is downloaded, but not all retailers can accept mobile payments.

On the other hand, not all smartphone users are inclined to use mobile payments, or even know they can make payment via their phone.

The younger generations – millennials and Gen Z – are more likely to be knowledgeable about mobile payments and to actually use it.

For older generations, physical payment is ingrained. Plus, it has its own advantages. A survey completed by Duetche Bank showed that Americans prefer cards because of cashback and other rewards. Those with this mindset may take longer to adopt mobile payments.

There are also challenges to adopting a new payment method. Businesses will have to upgrade their point-of-sale systems to be compatible with NFC mobile payment standards and this may mean additional cost to the business.

In addition, businesses would have to remain considerate to consumers that have not transitioned to mobile payment and would need to have a debit and credit card reader, too.

In the Marianas, I see early adoption in the tourist industry, as we get many Asian visitors who would be looking for mobile payments.

From there, our local workforce may become more knowledgeable and share that knowledge with friends and family.

For forward-thinking businesses, this is a great opportunity to take to get ahead of the curve. For example, one of the most successful mobile payment cases is Starbucks, which saw 25.2 million in mobile payment users in 2019. Compare this to Apple Pay which had 30.3 million mobile payment users in 2019 and can be used at any retail outlet. Starbucks even surpasses Google Pay and Samsung Pay. This is pretty remarkable, considering that their mobile app can only be used at one retailer.

Though local businesses may not be able to invest in developing their own app like Starbucks, advertising that mobile payments are accepted could attract tech savvy consumers, like the millennials.

Consumers who consider transitioning should be aware of any fees for linking credit cards to mobile payment apps and other charges. Consumers should also take the necessary steps to protect their financial information, like updating the app when prompted, using strong passwords and monitoring bank accounts for suspicious activity.

The mobile commerce revolution is on its way. Slowly. So, don’t go snipping your cards just yet.

— Jay R. Shedd is Senior Director of Sales, Marketing and Customer Service at IT&E, the largest wireless service and sales provider in Guam and the Marianas. He has more than 30 years of experience in the telecommunications industry.

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