Redefining the Digital Retail space with

NFC, BEACONS and APPLE PAY

Leading e-retail organizations such as Amazon, Paypal, Starbucks and others are providing tremendous push to the m-Commerce sector, by introducing mobile purchase and payment provisions. There is no doubt that mobile provides a plethora of opportunities for the retailers worldwide. Consumers are buying through their mobile devices irrespective of the continent either they or the retailers are located in. The whole world has indeed become a single market; accessible and available through any corner!!

Consumers are more liConsumers are more likely to use their mobile devices for making purchases, if they are also awarded with additional services & loyalty credits. A simplified process, ease of usage and user-friendly mobile interface are the key factors driving customers towards m-Commerce and retailers need to ensure they provide this experience to their customers, in order to maintain brand loyalty. This coupled with coupons and offers provided by retailers would encourage loyalty in this competitive business landscape.

Smart phones and Tablets have completely transformed the way we interact with the world today. Mobile technology has not only been limited to the communication aspect but has also become a part of our lifestyle including the way we shop, with the introduction of new shopping experiences. This paper on Mobile Commerce is about such experiences and innovations.Mobile commerce is fundamentally different from e-Commerce specifically because of the device used for performing the purchase. Endeavour has been followingthe trends in m-Commerce since its inception in 2011.

By 2018, e-Commerce is expected to reach $1.35 Trillion while

m-Commerce market value would be $6.26 trillion

m-Commerce : Where is it headed?

Mobile Commerce is expected to reach $6.26 Trillion by 2018, growing manifold than e-Commerce. The mobile technology coupled with rapid adoption of smartphones across the globe is indeed one of the main reasons behind this exponential growth. This is further supported by the retailers who are keen to adopt it and be present where their customers are. A plethora of mobile applications are also being launched everyday to ease the adoption of mobile commerce.

Mobile devices have given a boost to the m-Commerce transactions by providing a platform to uniquely engage with the Mobile devices have given a boost to the m-Commerce transactions by providing a platform to uniquely engage with the customer, enhance their buying experience, and ensure a hassle free process while addressing security concerns. Usage of mobile technology has also helped the retailers gain insights on customer buying behaviour and patterns and thereby has helped them provide customized offers driving more sales.

“By 2018, e-Commerce is expected to reach $1.35 Trillion while m-Commerce market value would be

$6.26 trillion

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Mobile technology has indeed made it possible for the retail industry to understand their consumers better and enhance their shopping experience.

It would not be wrong, if we credit this growth of mobile commerce to the phenomenal years of 2010 onwards. A graph below shows the growth in m-Commerce spending over the last three years.

If we segregate the mobile commerce activity between the two major categories in mobile devices, iIf we segregate the mobile commerce activity between the two major categories in mobile devices, i.e. smartphones and tablets; the smartphones still register a larger user base which is expected to reverse in the coming years. This change can be attributed to the ease of usage of tablets when compared with smart phones as tablets accounted for a larger share in per user spending when compared with smartphones.

m-Commerce Spending by PlatformSource: comScore m-CommerceMeasurement-U.S-1H 2013

m-Commerce Spending Per UserSource: comScore m-CommerceMeasurement-U.S-1H 2013

$47.17

$56.87

37%

63%

m-Commerce Spending by QuarterSource:comScore m-Commerce Measurement

$0.6

$8.0

$7.0

$6.0

$5.0

$4.0

$3.0

$2.0

$1.0

$0.0Q22010

Q32010

Q42010

Q22011

Q12011

Q32011

Q42011

Q22012

Q12012

Q22013

Q12013

Q32012

Q42012

$0.8

$1.6

$2.4 $2.6

$3.5

$4.6

$4.9$4.5

$3.8

$7.2

$5.9

$4.7

“Mobile technology has indeed made it possible for the retail industry to understand their consumers better and enhance their shopping experience.

It would not be wrong, if we credit this growth of mobile commerce to the phenomenal years of 2010 onwards. A graph below shows the growth in m-Commerce spending over the last three years.

If we segregate the mobile commerce activity between the two major categories in mobile devices, i

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The following graph shows the market value and growth rate for various forms of commerce forecasted by Forrester Research, a leading research organisation. This further substantiates the aforementioned

argument regarding the growth of mobile commerce market.

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m-Commerce: Challenges1. Information DisclosureInformation disclosure practices in m-Commerce are no less rigorous than would be expected of traditional shopping platforms; consumers understand the risks involved while making mobile payments, as well as the risks associated with having accounts linked to, or stored on a phone. Retailers should ensure that transparent and functional dispute resolution mechanisms are in place.

2. Security & Liability2. Security & LiabilitySecurity and liability issues are particularly relevant to m-Commerce transactions given the nature of technology involved and its susceptibility to theft, unauthorised transactions, or mobile phone malware. Other related issues are phone misuse and unauthorised transactions.

3. Privacym-Commerce transactions involve the collection of personal information about consumers, m-Commerce transactions involve the collection of personal information about consumers, including their financial details. Given this, m-Commerce transactions raise privacy issues for consumers, as well as concerns around mobile spam.

4. Interoperable Systems/Technology AvailabilityInteroperable systems are essential to mass adoption of mobile commerce. Though proprietary systems may function well in limited situations, they are a barrier to any large-scale implementation.

Key stakeholders in mobile commerce

Device Makers

Content Providers

Retailers

Network Operators

Payment Agents

Authorities

Users Users

Retailers and merchants need to understand that they cannot restrict their participation in m-Commerce transactions. Any customer, who uses a mobile device to access an e-Commerce site, automatically implicates the retailer’s participation in the m-Commerce business. Hence the retailers need to control and innovate on providing user-friendly online shopping experiences to customers.

According to a recent surveAccording to a recent survey, Mobile commerce revenue is predicted to spike in the next four years. Companies need to focus on building mobile application incorporating wearables, NFC and other wireless channels. In the near future, the mobile commerce space is going to reach another peak and play a major role in facilitating mobile shopping, payments etc.

Beacons, Wearables and NFC are beginning to top the market and bring the best user experience for shopping and payment services.

NFC Mobile Commerce iBeacons Mobile Commerce (Courtesty: poq)

m-Commerce is changing the way we shop, allowing the consumer to shop for anything, anywhere, anytime. This is indeed getting a boost from technological advancements in this field, such as the Wearables, Near Field Communication (NFC), Mobile Payment Platforms, Augmented Reality, and Mobile Apps.Some viable use cases across consumer and business fronts are listed below:

Applications for Consumers

Advertising & Promotion

Store Location Search

In-Store Navigation

Comparison Shopping

Self-Scanning

Authentication & Payment

Coupons

Loyalty Schemes

Catalogue Shopping

m-Commerce : What to expect in future?“The future of Commerce is Mobile.”

Applications/ Use Cases for Businesses

Order Management

Stock Management

Supply Chain Management

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Apple has launched the Apple Pay, a breakthrough contactless payment technology enabled with a NFC chip integrated within the mobile devices. With this revolutionary technology one can buy products in-store with just a touch on their iPhones.

This technology builds up on iPhone components like NFC technology, Touch ID, and the Secure Element. A secure finger scan or NFC swipe is supported by the secure element which is a dedicated chip which encrypts and stores payment information, helping in ensuring the privacy of the customers. Dynamic code generation and TouchID authentication add to the security element in these transactions. With partners including AmEx, MasterCard and Visa, it is set to redefine the way transactions are made in retail and services space.

Some of the benefits that Apple Pay is rallying around are:

With Apple Pay, Apple has successfully re-instated their product dominance in the mobility market and made a swift entry into wearable technology and mobile payments. Google Wallet, released half-heartedly in 2011, could not capitalize on this concept and mainly suffered due to lack of NFC technology support. Apple has eliminated that constraint by enabling both the iPhone 6 and iPhone 6 Plus to natively support NFC payments. Apple to natively support NFC payments. Apple Pay’s release also coincides with the mass roll-out of NFC payment ecosystem across industries and this will boost the technology adoption rate.

There have been mixed reactions from the retail world to this Digital Wallet wave. Giants like Disney, Target, Staples, Starbucks, Whole foods and Open have been on-boarded for introducing this payment system. Whereas retail giants like Best-Buy and Wall Mart are still on the fence.

Provides flexible mobile POS options and pop-up shops

Reduced security concerns as the interface is handled purely by the consumer

Lower ‘card-payment’ fees (Apple is tying up with various payment gateways and Banks) thus reducing the retailer’s cost

Apple Pay

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Let’s look at the benefits and limitations that a technology like Apple Pay can present for the Retailers:

Ease of use for the end-consumer as instead of carrying countless cards, coupons and tickets, they can store them in their phone’s digital wallet. This will in-turn increase the response to loyalty programs.

It is impossible for the consumer to download the App of each and every retailer they visit. Even if they download, there is no guarantee that they will not delete that App. With Apple Pay, all the benefits of Apps for retailers and restaurant chains are placed onto one single App: the user's phone.

A centralized system will help businesses understand their customers’ spending patterns better and roll out relevant promotions to retain them.

Pros

The cost of installing and maintaining NFC enabled scanners is very high and many retailers are sceptic about the adoption response to this technology by their end-user.

Retailers will have to bear Merchant fees for mobile-payment systems, which usually is higher than for plastic cards.

Best Buy, Wal-Mart and Target Corp. are backing a retailer-owned mobile technology group called Merchant Customer Exchange. MCX's payment gateway, based on QR code instead of NFC scan, needs only a software download and works on all existing iPhones and Android devices, unlike Apple's which is only for the latest generation handset.

Cons

With time and the end consumer’s response to Apple Pay, the industry will definitely undergo a change in the coming months. The release of Apple Pay, will bring in majority of mobile phone manufacturers following suite and bringing in NFC support for their devices. With features that simplify and speed up the purchase process at retail outlets, this will certainly present a plethora of opportunities for businesses.

Integration with Apple Pay:

Apple Apple Pay integration with m-Commerce App involves the participation from Retailer and Payment Providers; and, the consumer only drives it. App integrators can enable Apple Pay for an App by providing Apple Pay options and integrating with SDKs provided by the payment provider for handling the transaction. With this, consumers can easily purchase items without leaving the App by using any of the cards saved in their Passbook.

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Endeavour – The Mobility Company is a niche and exclusive mobility consultant and system integrator, committed to building scalable solutions for our enterprise customers. Since 2002, we have been the chosen partner of over 300 large enterprises and start-ups for their Mobile and Cloud engineering initiatives. Endeavour’s secure, innovative and cross-platform solutions leverage existing assets to minimize costs and give businesses a competitive edge. Our global experts guide our customers through road-map conception, user experience led engineering, back-end integration, and deployment.

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