Mobile commerce is set to revolutionise the way that consumers engage with brands, but marketers don’t seem to be putting it to good use yet. 

According to KPMG, mobile payments are set to reach £591bn by 2015 while Gartner predicts that 190m people will use their mobile to make payments in the next 24 months.

The potential for marketers is obvious, however in order to take advantage of this growing market they must first understand the full scope of what mobile payments entail.

Mobile payments

Like in the early days of e-commerce, there is some confusion as to what m-commerce actually is. The simplest and most accurate description of m-commerce to me is any transaction made from a mobile device, whether this is by SMS, through an application, browser-based or via contactless (NFC).

Contactless payments might grab a lot of headlines, but in reality this is just a small part of mobile payments technology. My main objection to contactless being described as mobile payments is that it technically isn’t “mobile”, since the customer still has to be physically present to make a transaction.

Furthermore, contactless transactions are limited to small amounts and customers may still have to queue before getting to the point of sale. As such the technology has failed to capitalise on the customer’s impulsive nature and restricted the value of the purchase – school boy errors in any marketer’s handbook.

The really interesting part about mobile payments is that marketers can actually engage with consumers from any location, at any time and access an unprecedented amount of knowledge about those they are targeting.

This means that marketers can deliver more relevant and targeted messages to customers based on their individual shopping habits that fit with their existing behaviour. For example, if someone buys a pair of shoes from a store they can pay for it instantly on their mobile device. At the checkout stage, they could even be offered the matching handbag at a discounted price.

Brands can also offer freebies at the payment stage, something as simple as a free cookie when you buy a coffee on your mobile. These are just a couple of examples of how mobile payments can improve customer service right now with the right technology, so why isn’t everyone doing it?

Barriers to mobile payment adoption

In order for mobile payments to become ubiquitous in daily life, more needs to be done to encourage consumers than just putting QR codes on posters and investing in (costly) contactless terminals, which actually change the way we buy things entirely.

In a recent U.S. Federal Reserve Board consumer survey, 42% highlighted that security was the main reason they didn’t use mobile payments. However, industry standards such as PCI compliance in card payments already help address concerns of cardholders, so why do mobile payments have to be different?

Consumers will always choose the safe option, so applying best practice standards like these to the mobile world will serve to inspire faith in the technology. The aim is for consumers to trust mobile payments as much as any other payment methods they currently use.

Another point is that mobile payments need to be open and accessible to all consumers in order to encourage adoption, not restricted to those with a certain mobile handset or bank account.

On the other hand, too many mobile payment offerings at once only serve to confuse: the consumer now has to log into a mobile app to buy their coffee, use another app like Pingit to transfer money, use NFC to pay for their lunch and then go into their mobile browser to order bigger items like TVs online.

Mobile payments need to be simplistic and universal. Having multiple options for different items and services simply isn’t the answer. With one intuitive and easy to use process, consumers will be more likely to gain a positive enough experience to keep using the service in future.

If the above is achieved successfully, the future of m-commerce is set to be an exciting time for both marketers and consumers.Even now, as eBay demonstrated, mobile payments can turn any location into a pop-up store and can let consumers make purchases within minutes.

In the near future, mobile payments will become seamlessly integrated into our daily lives. For example, a man on a packed commuter train could see a poster for a week’s holiday in the sun.

He scans the QR code, authenticates he is the cardholder and it is booked instantly. The real potential of mobile for marketing is staggering, but unless the technology consolidates and responds to existing consumer behaviour rather than changing the payments process entirely, it could be years yet before we begin to see the benefits.