Cutting through all the Apple excitement, does Apple Pay have what it takes to finally gain the scale that other mobile payment technologies have failed to achieve? Despite Apple’s halo effect my answer is no, at least in Apple Pay’s current form.

That has a lot to do with the chicken & egg implementation challenges for NFC. More importantly, it’s the classic “solution in search of a problem,” factor that has burdened most mobile payments products to date. It needs to solve actual pain points.

This is important for local media because mobile payments have the capability of attributing the efficacy of advertising by connecting the dots from ad exposures or engagements to finished local purchases. Mobile payments are a way to close that loop.

After covering Apple Pay in a blog post last week, we sat down in our analyst roundtable format (more of an interview this time). Since we covered larger screen iPhones and their ad implications on our last roundtable, we zeroed in on Apple Pay this time.

The short interview is embedded below and we’ll carry forward the conversation next week at our SMB Digital Marketing Conference in New Orleans. Hope to see you there.

The post Video Interview: Will Apple Push Mobile Payments Mainstream? appeared first on BIA/Kelsey - Local Media Watch.

Mobile payments continue to be an exciting area of innovation we’re watching closely. But there’s still a question whether there’s a bit of over-excitement. Given that paying with cash and credit card isn’t really broken, are many mobile payment offerings a “solution in search of a problem?”.

The answer is yes and no. But what needs to happen for any successful mobile technology is a considerable value exchange that will cause users to switch what is a very entrenched habit. Not only is payment behavior very habitual, but it’s something where security and comfort levels are vital.

People aren’t going to jump on board just because it’s a shiny new thing: It’s going to need much greater “value exchange”. Give me something better than the proposition of leaving my credit cards at home. The atomic weight of a credit card was never a pain point, so why does it need replacing?

We’re starting to see better offers in exchange for users’ mobile payment adoption. Starbucks continues to roll out features to save time for users, which is a tangible reward. Paypal is likewise thinking in these terms with “order ahead” and “skip the line” functionality. And Apple is a sleeping giant here.

I covered this concept in my monthly Street Fight column last week. You can check out the excerpt below and the full article here. This will continue to be a big topic for us, including at our Atlanta Leading in Local conference in just three weeks. Email me for a discount code (mbolandATbiakelsey.com).

Payment Technology: If it Ain’t Broke… Start an Entire Industry to Fix it.

Mobile payments is an exciting area of cultural and technological disruption, and at the same time a solution in search of a problem. Somewhere in all the excitement, we seem to have forgotten that paying for things with cash or credit card ain’t broke.

We’ve been covering mobile payments closely on this blog and many other places because it’s endemic to local commerce. Compared with m-commerce (i.e. Amazon Mobile), we’re talking about the emerging area of paying for physical goods in physical stores with your phone.

Or in some cases the mobile device isn’t on the user end but on the merchant end. That’s where we see things like Square and PayPal Here, which truly are disruptive technologies that democratize credit card acceptance among a huge swath of very small businesses (VSBs).

But notice how those few examples are the biggest success stories in what’s become known as “mobile payments.” One seldom-cited reason for this success is because they haven’t asked the user to change behavior. In other words, it’s still just a good old fashioned credit card swipe.

Compare that with many mobile payment technologies that ask the user to jump through a bunch of hoops to set up accounts. Once set up, the value proposition includes having a wallet that is lighter by the atomic weight of a Visa card. Or a loyalty program to get a free small coffee once a month.

Near field communication (NFC) is another example. Besides being held back by chicken-and-egg implementation challenges (device and POS compatibility, network effect, etc.), the value proposition was never that great to begin with: Tap your phone instead of swipe a card.

Add to all of this the fact that payments is a very entrenched habit for which comfort levels, security, and acclimation are paramount. Changing habits in such areas isn’t going to happen through marginal offers; it will require sizable incentives. For example, saving time. Lots of time.

That’s where Starbucks is moving. It has been the poster child of mobile payments by using its brand to put the practice on the map and to acclimate users. Continue reading.

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And Google has made two announcements in this past week that has the potential to disrupt local mobile advertising in an interesting way. The first announcement took place last week with Google announcement of Android Wear and the second was yesterday’s announcement of Google Now launching on the Chrome browser for desktop and laptop browsers.

BIA/Kelsey senior analyst Mike Boland and associate analyst Meshach Cisero conferred around these two mobile topics today on the latest in our ongoing Analyst Roundtable series.

Boland began the conversation by noting that “Starbucks has been a leader in mobile payments.” He then outlined the upgrades of the new mobile payment upgrades and features which included easier point-of sale transactions such as tipping your barista and the biggest upgrade was the ability to order in advance.

Boland also stated Burger King also released a similar feature — to help consumers get their Whoppers faster. Boland says this is important because it allows users to have a personalize portal and provides a lot more convenience. Boland did mention while this is an advancement in mobile payments for Starbucks, it’s a brand new service from Burger King. Boland also goes on to say these apps open the door to a lot of potential ways to interact with customers such as loyalty programs.

Next, Cisero shared his thoughts on the recent announcement of Android Wear and Google Now for Desktop.

“Google has the potential to disrupt local mobile advertising in an interesting way,” Cisero said referring to yesterday’s announcement of Google Now migration to desktop. Previously the service was only available to smart phone users. However, now the service is going to allow you to sync the services between all devices. Google Now on the desktop seems to be only a supplement of the mobile version but it would appear to me that google has a more robust plan of building it out to get a more holistic view of a users computing behavior.

The big question is will consumers actually buy these smart watches? Cisero strongly believes that this is Google’s strategy to bring wearable tech to the mass market. He highlighted Google’s efforts to incorporate style and functionality by partnering with companies like Fossil.

Check out the video below for today’s Analyst Roundtable in its entirety.

The post Analyst Roundtable: Keeping Up with Mobile: Starbucks, Burger King and Google appeared first on BIA/Kelsey - Local Media Watch.

Smartphones are becoming increasingly more involved in the shopping process with a lot of technology coming out that is slowly starting to enable smartphones to replace credit cards, loyalty cards and much more. When asked about the use of smartphone scanned code loyalty programs, 27.2% of men were a part of loyalty programs that allowed them to register their purchases in this way while only 16.6% of women were part of one. Men are also twice as likely to have a digital wallet than women and 38.7% of men who use a smartphone when shopping locally have occasionally or often used a smartphone to scan a bar-code.

Not only are men quicker to adopt new functions for their mobile device in-terms of shopping locally than women, but those who use their mobile devices for shopping locally do so more frequently. Of the male respondents, 36.4% use tablets for local shopping once a day (or more) compared to only 29.0% of women and 43.1% of men use smartphones once a day (or more) compared to only 38.0% of women.

Want to know more about advertising to male vs. female consumers? Stay tuned for more details on BIA/Kelsey’s upcoming spotlight deck about our gender specific findings from our Consumer Commerce Monitor.

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A few things that characterize mobile payments are early stage experimentation and standards battles. That’s to be expected in any embryonic sector.  There’s NFC, mobile card readers, POS hardware that scans the barcode on your screen (a la Starbucks), to name a few.

Sometimes the mobile device is on the payers end, like like PayPal’s new app; and sometimes it’s on the receiving end like Square. All the nuance, standards and differing use cases are too often lumped together as just “mobile payments” by generalist media and linkbait headlines.

To cut through a lot of this clutter, we released a report recently on the state of the union in mobile shopping and payments. One of the many standards that will vie for consumer adoption, appeal and comfort levels is what Apple is likely to unveil for purchasing physical goods.

This is an outlook I’ve been arguing for a while, which was affirmed last week by Tim Cook’s earnings call statements and some WSJ digging. The idea is roving transactions throughout retail stores by scanning items with an iPhone and paying with iTunes. No checkout aisle required.

Apple has long been a sleeping giant in mobile payments for physical goods. It already owns the consumer touch point (375 million iPhones) and payment processing (600 million iTunes accounts). And for a while it has employed a version of the model outlined above in its own stores.

The next step is to push that out to other retailers. It’s perfect for places like IKEA: scan an item, pay with iTunes, grab it from the warehouse, and be on your way. The plot has thickened since my original prediction with iTouch (payment authentication) and iBeacon (lead you through the IKEA maze).

Of course there are lots of moving parts such as security, parallel standards (like iBeacon), and most of all retailer relationships. The latter could be sticky but if there’s anyone with a proven ability to partner with industries that its in the process of upending, it’s Apple.

My colleague Suzanne Ackley covered more of last week’s developments and related BIA/Kelsey data. And over the weekend I unpacked some of the possibilities at Huffington Post. Check it out and let me know if I’m crazy. Or if you want to engage over the topic, that’s what we’re here for.

The post Begun, The Mobile Payment Wars Have: Part 4 appeared first on BIA/Kelsey - Local Media Watch.

Is Apple getting into the mobile payments space? I don’t mean for digital goods, such as songs and other virtual goods, which it already sells on mobile devices through iTunes, but rather for physical goods in the offline world. CEO Tim Cook alluded to the idea during Apple’s first quarter Fiscal Year 2014 earnings call on January 27. Although he declined to speak about Apple’s plans in the space he did have the following to say:

“We’re seeing that people love being able to buy content, whether it’s music or movies or books, from their iPhone, using Touch ID. It’s incredibly simple and easy and elegant, and it’s clear that there’s a lot of opportunity there. The mobile payments area in general is one that we’ve been intrigued with, and that was one of the thoughts behind Touch ID. But we’re not limiting ourselves just to that. So I don’t have anything specific to announce today, but you can tell by looking at the demographics of our customers and the amount of commerce that goes through iOS devices versus the competition that it’s a big opportunity on the platform.”

BIA/Kelsey’s Mike Boland predicted back in late 2011 and again last January that Apple would join the mobile commerce universe by turning mobile devices into portable POS (point of sale) systems… similar to what it did with its Apple Store app, which enables consumers to use their devices to scan a barcode in an item in the Apple Store and pay for it via their iTunes account.

The analysts at BIA/Kelsey have written several posts about the use of mobile card readers in general and about Square in particular. But, the mobile payment space that Apple is contemplating entering, according to Boland, is not the same space occupied by companies like Square and Stripe, with their mobile credit card readers. A better comparison would be to companies with digital wallets, such as Google and Paypal.

But will consumers welcome Apple’s entry to mobile payments? In 2013, BIA/Kelsey surveyed consumers about many of the same topics, including mobile payments and online wallets, in the Consumer Commerce Monitor™ (CCM) survey. Although we didn’t ask about Apple, digital wallets in general were met with a healthy dose of skepticism by the full sample of consumers. Of the 2,000 consumers surveyed, 8% already had a digital wallet and another 8% were interested in getting one. But more than half of those surveyed, 54%, were either not very interested or absolutely did not want one.

There is greater interest in digital wallets among smartphone users, with 11.9% already having one, 13.9% wanting to get one, and only 40.6% not very interested or don’t want at all.

When you look at the breakout by age group, it is not surprising to discover that the younger demographics are far more interested in digital wallets than the older demographics.

— 18-24 year olds: 14.4% have, 13.2% want to get one, 42% are not very interested/don’t want.

— 25-34 year olds: 18.6% have, 10.2% want to get one, 37.5% are not very interested/don’t want.

— 35-44 year olds: 8.5% have, 13% want to get one, 46.0% are not very interested/don’t want.

— 45-54 year olds: 4.5% have, 6.0% want to get one, 58.7% are not very interested/don’t want.

— 55-64 year olds: 0.8% have, 4.4% want to get one, 62.2% are not very interested/don’t want.

— 65+ year olds: 2.4% have, 3.5% want to get one, 74% are not very interested/don’t want.

So will consumers welcome Apple’s version of a digital wallet? Unlike some other mobile payments companies, Apple wouldn’t be starting from scratch, as it already has a built in audience for a mobile payments platform with over 500 million iTunes customers.

The post Will Consumers Welcome a Digital Wallet from Apple? appeared first on BIA/Kelsey - Local Media Watch.

Square began offering credit-card readers in 2009, which allow merchants to accept payments on mobile devices. Square originally targeted small businesses, but it now also sells a point-of-sale terminal for use in retail stores and has tools to help merchants sell online. The company charges a fee of 2.75 percent per transaction, along with free software.

Square competes with companies like EBay Inc.’s PayPal, Inuit, iTransact, and Shopkeep POS in the payments software space. In BIA/Kelsey’s Local Commerce Monitor™ (LCM) survey on advertising and marketing of small and medium businesses (SMBs), we asked SMBs about their usage of a mobile credit card swipe. 40% of respondents currently use one and an additional 16% said they are likely to adopt one for use within the next 12 months.

According to our Consumer Commerce Monitor (CCM) survey, consumers report using mobile phones and tablets to shop locally. We asked consumers how they find, engage and transact with local-serving businesses, including where they use their mobile devices. Consumers using smartphones report being far more likely to use their devices for local shopping while out of their homes, while consumers using tablets are far more likely to use their devices at home.

(Local Shopping means 25 mi radius from respondent’s primary residence)

When it comes to mobile payments via credit swipe, 42% of consumers say they have done so. The heaviest users are the 35-44 age group (45.4%) and Hispanics (48.9%).

35-44 yr olds local shopping characteristics:

• 64% perform their local shopping in store
• 28% perform their local shopping online
• 68% hold an associate’s degree or higher
• 50% household income ranges from $50,000 to $124,999

Hispanic local shopping characteristics:

• 57% perform their local shopping in store
• 31% perform their local shopping online
• 58% have an associate’s degree or higher
• 41% household income ranges from $50,000 to $ 124,999.

SMBs realize that more of their customers are going mobile and they are optimizing their presence to be more mobile as well. According to our LCM survey, almost 40% of SMBs reported that mobile marketing is a high priority in the next 12 months.

Check out BIA/Kelsey’s LCM page for more information.

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37.1% of consumers used a smartphone for local online shopping and 19.4% used a tablet, according to BIA/Kelsey’s Consumer Commerce Monitor (CCM) survey. SMBs are well positioned to take advantage, with 32% of SMBs reporting they use some form of mobile advertising to promote their business, up from 28% in 2012 according to BIA/Kelsey’s Local Commerce Monitor (LCM) survey.

In BIA/Kelsey’s annual Local Commerce Monitor (LCM) survey on advertising and marketing of small and medium businesses (SMBs), we asked several questions on the satisfaction of the various advertising and marketing choices made. In our new Consumer Commerce Monitor survey, we asked consumers how they find, engage and transact with local-serving businesses, including where they use their mobile devices. For the consumers who use tablets for local shopping, the majority, 90%, do some from home, 21% do so at work, and 17% do so in-store. One-third of tablet users reported using their devices at least once a day for local shopping, with nearly another third using them a few times a week.

Consumers using smartphones, on the other hand, report being far more likely to use their devices for local shopping while out in the world. Nearly 68% reported using their smartphones for local shopping while in store. Nearly 82% of consumers reported using their smartphones at home for local shopping, while 49% use their devices at work. More than 40% of smartphone users reported using their devices at least once a day for local shopping.

One of mobile’s path to success for the small business can be found in payments. SMBs are ready to close the loop with shoppers who use their mobile phones; 40% of SMBs reported accepting payments at the point of sale with a mobile credit card reader attached to a smartphone or tablet, with an additional 16% planning to add this capability in the next 12 months. This in line with consumers’ adoption of mobile payment with 42% of consumers reported having made a payment using a smartphone credit card swipe in the past six months, with over 7% reporting they do so often.

As their customers are using mobile devices such as smartphones and tablets to shop online, SMBs reported going increasingly mobile. 16% of SMBs surveyed reported that mobile was an extremely high future marketing priority for them, and another 21% reported it was a very high priority.

SMBs are still working on success with mobile, but need guidance on effective marketing opportunities.

The post Going Mobile – Consumers vs. SMBs appeared first on BIA/Kelsey - Local Media Watch.

While industry hype would suggest that payments will be largely coming from the phone within a few years, a majority of Money 2020 attendees, in a survey, said it won’t be happening until 2020 or later.

The four question survey also revealed that attendees believe the biggest drivers of a new payments environment are 1) data and analytics; 2) wallets for consumers; and 3) omnichannel commerce using multiple devices.

Who will be the big winners? Attendees said traditional financial service providers, marketing services and payment companies. The y said the biggest losers will be banks, Point of Sales equipment providers, acquirers and payment networks.

The post Money2020 Survey: Attendees Weigh in on Future of Payments appeared first on BIA/Kelsey - Local Media Watch.

As I mentioned last week while writing about PayPal’s new app updates, we just published a big report on the state of the union of mobile shopping and payments.

This is of course an exploding area with lots of interest and investment. But it also has equal parts confusion as there is lots of competition and experimentation with different standards at the sector’s early days.

Below is the executive summary of the report and you can learn more about obtaining the entire thing at the paper’s landing page or just email me directly (mbolandATbiakelsey.com).

This will be a big area of focus for us. To unpack some of the paper’s findings, you’ll also see below the exec summary a short video we shot earlier to bat around some of the takeaways.

Lastly, we’ll discuss it further this week in Austin. Hope to see you there.

Executive Summary

There’s a mobile revolution underway, evidenced by all the people staring down at their devices. The seductive glow of smartphones – now at 60 percent penetration in the U.S. – has stolen our attention, even from friends and loved ones.

Among the many areas where the ongoing smartphone revolution will change our lives, mobile shopping is perhaps heating up the fastest. This includes using one’s mobile device to find, compare and buy things in the real world; everything from lunch to a new TV.

In the online world of the last decade, it was all about e-commerce: buying things online to be shipped. This is playing out in mobile with what’s known as m-commerce. But the larger opportunity – given the mobile device’s portability – is mobile-assisted offline shopping.

Lots of the investment and innovation in mobile apps and content will focus on this larger pie, as e-commerce and m-commerce only comprise 7 percent of U.S. retail spending. The rest is offline in physical stores, especially for products that shoppers want to see before they buy.

As this continues to play out, mobile should help rather than hinder bricks and mortar businesses. The same can’t be said for many e-commerce players like Amazon. Mobile will be an important utility for shoppers and merchants if embraced in the right ways.

Possibilities include storing consumers’ payment information within smartphone apps, to be securely transferred at the point of sale (POS). It also includes merchant-facing mobile hardware that allows them to accept credit card payments in convenient ways.

In addition to easing transactions for consumers and merchants, mobile payment products are developing as tools to track consumer behavior. This creates opportunities for targeted marketing and different ways to engage customers.

Mobile payment products also offer the potential to improve customer acquisition, as well as vital areas such as retention, loyalty, and operational efficiencies like inventory management and cash flow. And for advertising, it has the potential to reach the “holy grail” of better ROI tracking.

Over the last decade digital advertising has sought this clearer ROI through things like online search ads. But search and online display advertising don’t capture the complete path to the physical cash register where, again, most purchases take place.

Now with the mobile device’s growing use, portability and capabilities, the opportunity exists more than ever to create this measurable path between various forms of marketing, purchases, rewards programs, and repeat business: A closed loop.

It’s still too early in the life cycle of mobile shopping and payments to establish a single standard. There’s a great deal of innovation and experimentation in these early stages and the following pages seek to provide the “lay of the land.”

This paper follows BIA/Kelsey’s previous mobile insight paper From National to Local: Mobile Advertising Zeros In and takes the next step in the purchase cycle: engaging users while shopping, influencing their behavior, facilitating conversions and collecting data.

The post New BIA/Kelsey Report: The Mobile Shopping and Payments Revolution appeared first on BIA/Kelsey - Local Media Watch.