Are You Ready for In-Person Mobile Payments?

MasterCard mobile credit card payment with smart phone in retail environmentDespite all the recent headlines about mobile payment platforms from Apple, Facebook and Google and flashy new mobile commerce startups, mobile payments today are still overwhelming driven by remote mobile purchases—such as when a consumer uses a tablet to make a purchase from the comfort of his or her couch. Relatively few people are taking advantage of in-person mobile payments such as holding up a phone to a point-of-sale (POS) terminal in a store. In fact, remote mobile payments accounted for nearly 98 percent of all mobile payments made globally in 2014 across the 46 markets researched by Euromonitor International. This was driven by the high penetration of tablet devices in more developed markets.

But that math is about to change – and quickly. All types of mobile payments are projected to expand nearly four-fold from 2014 to 2019 in those 46 markets, to exceed $1 trillion in payments made through tablets and mobile phones in 2019. Meanwhile, in-person, or proximity mobile payments, are expected to expand nearly 12-fold from $8 billion in 2014 to $104 billion in 2019. It’s that latter type of mobile payment that is truly the Holy Grail because of what the mobile wallet can do in terms of digitizing the in-store path to purchase and payment process.

The Benefits of Mobile Payments

For merchants, the benefits of in-person mobile payments include the ability to reduce costs by lowering fraud loss and/or processing fees as well as drive revenue by moving people through the line more efficiently. But the biggest win for retailers is what happens when the payment and shopping experience is digitized: Everything around those actions can be tracked and consumers can be targeted on future paths to purchase. Of course, a consumer would have to opt in, download the mobile app and agree to share their location, but it speaks to the potential of a mobile-enabled environment.

Retailers can then tailor offers based on a consumer’s purchase history or location; devices can offer in-store support to consumers, helping them comparison shop or find a product. Mobile also creates an opportunity to attract consumers during off-peak periods in business, by enabling a connection between the merchant and consumer at all times. If a shop slows down from 2 to 4 p.m., for example, the merchant could send out discounts for that time frame or target consumers in a certain area.

Why Small Businesses Need To Be Ready

A mobile-enabled environment is quickly becoming the new reality for all merchants. Like the big-box counterparts down the road, small businesses also have to cater to this new anywhere, anytime consumer. Fortunately, there are more ways than ever for small businesses to accept payments thanks to near-ubiquitous payment networks from MasterCard and others. The more recent arrival of mobile technology in stores has also created more opportunities for retailers. For example, mobile-enabled, cloud-based POS technology such as solutions from ShopKeep POS, Erply, Vend and Leapset have enabled some smaller merchants to accept digital payments for the first time. Many of these products may also enable merchants to perform other duties, such as inventory tracking, loyalty program management, or employee administration more efficiently through a complete POS offering.

Furthermore, mobile wallets like Apple Pay or Samsung Pay that aim to create a wide acceptance network could open the door to additional mobile initiatives for small businesses as well. Wallets with a broader reach enable small businesses to stay on the cusp of payment innovation without having to invest in designing, developing and launching their own proprietary mobile wallet. In addition, being able to take advantage of this type of product can help businesses expand their reach to more tech-savvy (and often more affluent) shoppers. Mobile also helps make purchases easier and more convenient, which means the customer will often spend more—good news for any merchant.

Mobile is in the process of turning commerce on its side and enhancing the entire customer experience along the way. The opportunity to enter a consumer’s mobile world will allow retailers to create a rich real-world experience—and small businesses that want to compete can’t afford to ignore this important shift in the way consumers want to pay for purchases.


Ajeet Khurana
Ajeet Khurana
Ajeet Khurana wears many hats: author, angel investor, mentor, TEDx speaker, steering committee of the NASSCOM Start-Up Warehouse, Director of Founder Institute, Venture Partner with the seed initiative of a top Venture Capital firm, and former CEO of IIT Bombay’s business incubator, among others. Before all this, he was entrepreneurial twice in the field of education and web publishing. As a lecturer at the University of Texas at Austin, he taught e-commerce back in 1993, when the term "e-commerce" had not yet been coined. An undergrad in computer engineering from the University of Mumbai, and an MBA from the University of Texas, Ajeet is presently an active name in the startup ecosystem. From starting two ventures as a solopreneur, to helping a large number of startups with their go-to-market, he has never shied from getting his hands dirty. At the same time he has helped dozens of startups raise investment. He truly believes that small business owners are driving change in the world, and need to be facilitated as much as possible. Innumerable small businesses have gained from his attitude, vast professional networks, financial acumen and digital mindset.

See all posts by Ajeet Khurana
  • All views expressed on the published articles at are those of each of the authors, and do not in any way represent the opinions of Mastercard International Incorporated or any of its affiliates (“Mastercard”). Mastercard is not responsible of the information contained in these articles.