Mobile can help in-store experiences meet consumer expectations: Study

By Giselle Abramovich

September 30, 2008

Mobile in-store payments

Payments made via emerging methods such as radio frequency identification (RFID) and SMS are expected to grow to $400 billion by 2010.

This was a key finding of research conducted by the Cisco Internet Business Solutions Group (IBSG). In addition, 23 percent of all survey respondents expressed interest in using a mobile device to make contactless payments in physical stores and that number is only expected to grow.

Two-thirds of current mobile banking users expressed interest in swiping a device embedded with a chip at the point of sale.

Cisco IBSG, the company's global strategic consulting arm, surveyed more than 1,500 consumers to better understand how their behaviors and perceptions shape the evolving commerce landscape of shopping and payments.

What does this mean?

The shift in consumer shopping behavior presents an opportunity for financial institutions to evolve from simply being providers of the payment element of a purchase, to being a uniting factor among consumers, merchants, advertisers, product manufacturers and payment providers.

As consumers increasingly use the Internet and mobile devices to make purchases and payments, banks are subject to both customer attrition and revenue loss.

The research also shows, however, that banks can reverse this trend and use their connections to merchant and consumer payment data to create new revenue models from advertising, cross-selling and value-added services surrounding points of sale.

The survey suggests that the physical-store experience is increasingly falling short of consumer expectations.

In fact 50 percent say the checkout process takes too long, 48 percent say items aren't in stock, 46 percent say they can't find the items they want.

Also, 22 percent say they don't always have applicable coupons or offers with them and 20 percent say it is hard or time-consuming to keep track of receipts.

As consumers' expectations rise, merchants, advertising agencies and new financial services entrants need to capture consumer attention at the point of purchase.

The survey found that 87 percent of those who use the services of alternate payment providers (such as PayPal and Obopay) indicated a strong interest in using mobile Short Message Service (SMS) or a similar method to initiate payments in physical stores.

Banks need to provide mobile and Internet services with greater transparency, security, speed and flexibility.

financial institutions should also use their relationships with both merchants and consumers to provide new revenue sources to the merchants and value-added services to consumers.