50% US Retail Transactions Are In Cash, but mCommerce Will Change That

June 4, 2015     By : Kate

Mobile commerce is appropriate for every retailer, but there are certain products that have a better chance of getting sold through portable devices. There are a few industries where it is absolutely necessary to have a mobile offering; in fact, if you do not have a mobile offering, then it would mean hindrance to growth and success. TV shows, games, e-books, music and films/videos are a few examples of the sectors that have experienced a huge uptake in consumer purchases from mobile devices.

If you are considering whether or not you require a mobile presence, it is important to understand that mobile commerce isn’t only used for purchasing on portable devices. A huge portion of mobile visitors who visits your site will actually arrive at the store and will complete the purchase. Thus, mobile is now a major channel in the path to purchase. Higher-priced items such as furniture, cars, and designer clothing and jewellery are rarely impulse purchases—the same way a CD or DVD is—and require careful consideration from the customer. Well-designed and optimised mobile sites allow users to complete a thorough research process wherever they are, so they can assess their available options before completing a transaction. This way, mobile commerce acts to assist desktop transactions rather than becoming the method of purchase.

The value of commerce transactions conducted via mobile handsets/tablets will exceed US $120 billion by 2017 with 150 million users. Mobile commerce growth in the US is driven by increasing convenience, value & security available to the consumers via smart devices. Retailers are bringing efficient mobile websites/apps and even delivering omni-channel experiences.

The research team at GrowthPraxis found out that mobile commerce accounted for 15-20% of retail e-commerce sales in 2014. There is a huge scope for mobile commerce, both online and in-store; transaction value per tablet buyer per year is expected to overshadow that of the smartphone buyer. Both devices will play a major role for discovery, payment, deals and offers. The launch of Apple Pay, Android Pay and Samsung Pay is expected to propel m-commerce in the next couple of years. In addition, proximity in-store payments are expected to take off.

At Deutsche Bank Global Financial Services Investor Conference, CEO of MasterCard Ajaypal Singh Banga gave his views on mobile commerce, “50% of US retail transactions are still conducted in cash, but mobile commerce will change that.” When asked about the introduction of contactless terminals and its effect on mobile payments, he added, “Over the next year or two, you are going to see a large expansion in those (segments). I think you are going to see a real challenge to cash from those systems and I’m looking forward to that because I get paid for it.”

Challenges with Mobile Commerce

– One of the major challenges affecting the use of mobile commerce is the cumbersome checkout process most mobile sites offer. Entering credit details and shipping addresses is time-consuming, and a lot of zooming in and out to select text fields and dates are required. This is certainly not a seamless transaction; consumers expect a simple, easy and quick checkout process.

– The size of handsets still remains a major challenge for mobile commerce. More than 50% of consumers prefer to browse online and buy in-store or vice versa. Although desktops and tablets are able to handle design features perfectly, mobile phones still pose a problem. This is why many consumers find it hard to communicate through smartphones.

– Security concerns are also hindering the growth of mobile commerce. Retailers are still not taking appropriate measures to safeguard consumers’ data and prevent fraud. Mobile commerce fraud is now becoming a major concern. The growth rate of mobile commerce fraud is much higher than the growth rate which mobile commerce is witnessing. Revenue that mobile commerce merchants lost to fraud increased by 70% from 2013 to 2014 (LexisNexis Risk Solutions Report). All merchants lost 0.68% of revenue to fraud in 2014 in comparison to 0.51% in 2013.

Kate

Kate is a staff writer at LetsTalkPayments.com.
She likes to write about mobile payments and mobile commerce.

If you have any suggestions or questions for the author, please email us at follow@letstalkpayments.com