The lines between in-store retail, e-commerce and mobile shopping are not as distinct as they once were. As consumers adjust to choice, speed and efficiency, retailers must ensure transactions are just as seamless, across all channels and devices.
It may only be a short time until the entire shopping process, from marketing to payment, is integrated into one experience, according to a senior executive from First Data.
The term ‘universal commerce’ was coined by the global payments processor, which provides the technology behind the Google Wallet payment system. Serving more than six million merchant locations, First Data has also partnered with Starbucks and Walmart.
“There are various definitions of alternative payment solutions but in its simplest form we would define them as a payment method that is not a traditional cash or credit/debit card transaction,” says Mick Holmes, Regional MD, Middle East & Africa, First Data.
“For example PayPal would be considered by many as an alternative payment solution, as would virtual currency Bitcoin and Google Wallet which allows consumers to utilise Near Field Communication (NFC) on their smart phone to pay for goods,” he says.
There are of course nuances between regions and countries as to what is considered an alternative payment solution. First Data has observed a surge in uptake of prepaid shopping cards, the likes of which are available in large malls, such as Mall of the Emirates and Ibn Batuta Mall. In Kuwait, prepaid cards are being issued as a ‘family card’ allowing one family member to distribute prepaid cards to other family members and service staff.
Middle East shoppers fuelling commerce evolution
“Consumers in the Middle East clearly have a strong appetite for new ways to pay for their goods,” says Holmes. “Research that First Data carried out late in 2011 found that consumers in the region demonstrated a greater enthusiasm for new payment technologies, such as contactless and mobile.”
The research found that the likelihood of using a mobile device to make payments was highest in the Middle East compared to countries including the UK, Germany and Poland. Holmes predicts that retailers in the Middle East could leapfrog contactless payments and shift straight to mobile payments. “For merchants in the Middle East the message is clear – consumers are ready for these technologies now,” he tells AMEinfo.
As it stands many banks across the region, and in the UAE in particular, are now providing mobile banking apps for their customers. In Kuwait in particular there is a deluge of mobile payments for mobile apps as smartphones dominate the market.
Dubai’s eGovernment mobile payment portal, mPay, generated an 11% increase to Dhs8.5m in 2012 alone, according to the department’s own statistics. The mPay facility enables users to pay for a variety of government services, either through a mobile app or via SMS.
mPay generated over Dhs8,500 with 36,325 transactions last year, compared with only Dhs7,651,198 through 26,174 transactions in 2011. Dubai Electricity and Water Authority (DEWA), Roads & Transport Authority (RTA) and Dubai Police were the main three government bodies collecting the payments, while RTA, DEWA and Dubai Police were the top three departments, respectively, by number of transactions achieved.
Another regional tie-up for mobile payments took place in January, when MOBIbucks announced their partnership with Middle East Payment Services (MEPS), a consortium of seven banks, based in the Middle East. The benefits are particularly significant for expats in the region, with such services clocking minimal fees for cash transfers across borders.
Over $100bn a year is wired out of Saudi Arabia by expatriate workers, and alternative payment systems will only make that process cheaper and easier, through both technology and competition.
“The convergence of traditional brick and mortar, online and mobile commerce continues to drive the evolution of the payments industry and change the way consumers the world over make purchases,” explains Holmes.
Shoppers now have the ability to read third party product reviews and conduct price comparisons – even when they’re in the mall. It is even more likely that they will pay attention to what their friends recommend, or Like, via social networks.
“This universal commerce experience integrates shopping, payments, marketing, loyalty and financial management. Indeed, universal commerce represents a new consumer engagement strategy that financial institutions, mobile network operators, card networks, payments providers and retailers must all pursue if they are to successfully capture the business of increasingly connected consumers,” Holmes says.
A key enabler of universal commerce is undoubtedly the mobile phone, specifically smartphones, which have had a profound impact on the way that consumers engage with the shopping experience. They have effectively become the focal point of an integrated customer experience before, during and after a transaction.
“While great strides have been made over the last five years there is still a lot to realise before mobile payments truly come to fruition. Adoption will ultimately be driven in the Middle East when there is a clear value proposition for the consumer that drives uptake, beyond innovative early adopters, into the mass market,” Holmes predicts.