Friday , December 13, 2024

M-Commerce: Mobile Payments: The Next Cash Cow for Small Businesses?

Shelley Plomske

Mobile payments and social marketing are creating many new opportunities for small and mid-sized businesses. Here are some key points for merchants as these new technologies and techniques ramp up.

This year will be unlike anything ever witnessed in the payments industry. Driven by the global economic crisis, the business environment has never been more competitive. Companies, especially small and medium-sized businesses, are under overwhelming pressure to cut costs and improve revenue streams.

At the same time, new technologies are rapidly being developed to match consumers’ constantly evolving buying habits. Case-in-point: Driven by the popularity of Facebook, Twitter and the virtual storefront, many consumers are spending less time in physical stores and more on the Internet to make purchases, especially via their mobile devices.

Companies that have resisted the urge to “go mobile” with their sales and payment services are quickly finding themselves left behind. Mobile devices are truly influencing the buying habits of a socially networked consumer base. Change is constant and if small businesses are to grow in this challenging economy, they must, perhaps with some help from their merchant acquirers, reevaluate sales strategies and embrace adaptive marketing programs.

The growth of mobile devices and their potential to enhance sales is carving a new path for merchants. According to a 2010 Internet Retailer article, customer convenience is the key driver to retailers adopting mobile, with 64% of those quizzed by analyst Aberdeen Group contending that as a result, mobile is a definite initiative. More than half of all companies also say that they would prefer using mobile platforms for both payment and loyalty functions.

Risk of Failure

Another article in Internet Retailer notes that Wal-Mart Stores Inc. estimated 40% of all visits to its online shopping sites were launched from a mobile app. Underscoring this in Business Insider, Bank of America Corp. predicted $70 billion in purchases from mobile devices by 2015.

Despite these positive data, many small to mid-sized companies don’t have the resources or the time to make the move to mobile payments.

Still, integrating mobile functionality into a business plan is a “no brainer.” Demand is undeniable. Unfortunately, far too many companies ignore or refuse to follow the trends or simply don’t have the necessary resources.

Take Blockbuster Video, for example. For many years, the company stayed ahead of the curve, accurately predicting and benefitting from the transition of video cassettes to DVDs. But with the advent of the Internet and streaming, the company lacked flexibility, causing it to lose ground to such competitors as Netflix.

Equally noteworthy is the once-dominant cell-phone manufacturer Nokia, which, failing to see the growth possibilities of the smart phone, wasn’t prepared to adapt to mobile applications. In fact, analyst firm Ovum assessed that Nokia’s flagship hardware was insufficiently powerful to keep pace with the market.

Research In Motion (RIM), maker of the once-popular BlackBerry, went down a similar path. The company failed to develop new products relevant to the changing marketplace, making its technology relatively obsolete. RIM was unable to design a strategy to make the transition from the corporate to the consumer world. The end result was falling market share and significantly reduced profits. It remains to be seen if RIM’s recently released smart phones can arrest the decline.

So, how can small businesses avoid becoming the next Blockbuster, Nokia, or RIM? To fully jump on this emerging market, merchants need to change their perspective.

To capitalize on new trends, flexibility is the underlying theme. Not just in the actual payment-system technology they use, which is essential, but the entire corporate information-technology infrastructure. Flexibility must permeate IT if a company is ready to adopt “the next big thing.”

From a chief information officer’s perspective, this means ensuring financial applications and systems are built on strong open standards with an ability to quickly adapt to a changing market. Additionally, security once again takes center stage as any integrated system must protect against threats and meet stringent compliance regulations.

But this will only take a company so far. Going mobile means shifting the very approach and execution of a business model. It demands speed, flexibility and a readiness to leverage a wide range of new social-media avenues. As mentioned before, Blockbuster failed because it couldn’t transition to a new way of thinking. Anything other than a brick-and-mortar store seemed unrealistic. Nokia also didn’t have the versatility to “see ahead of the curve” and missed the boat.

Fortunately, small and medium-sized businesses are in a good position to jump on the mobile trend. Unlike large corporations, these organizations tend to be flatter, thus allowing them to be more nimble. They’re well-suited to integrate and adopt a culture of change.

Clearly businesses today have no room for inflexible processes—especially with payments. They must develop a corporate infrastructure nimble enough to incorporate new methods of payment, everything from credit cards and mobile payments to gift certificates and e-checks. And this doesn’t even include new and emerging methods of payment such as contactless payment, biometrics, and stored-value instruments.

Taking the Next Step

This means the entire infrastructure must be ready to adapt, from new marketing initiatives to mobile-savvy personnel. And don’t forget customer service—this has never been more critical. Mobile shopping means you’re always open for business, and service personnel must be ready and able to provide support. Whether it’s a problem with returns or failure of purchase, the system should be in place to meet customer needs at any time.

Driving all this flexibility and adaptability is the requirement for education. It is necessary to invest the time and resources on mobile-payment processes. A core understanding of the underlying technology is a must to ensure a system right for your business.

It’s also time to get smart on social media. In addition to expanding your brand and presence, “going viral” is the engine to boost sales. If you’re not familiar with Facebook, Twitter, Pinterest and Google+, it’s time to get smart! It’s essential to have a dedicated resource for social media, as well as campaigns specifically designed to leverage these mediums. Social-media marketing is unlike conventional forms, and requires a process that embraces keywords and search-engine optimization. It’s the only way to stay ahead.

It certainly is an exciting time in the payments industry. The global economic crisis has sent companies looking for new ways to get ahead. The ability to accept mobile payments is one such path many are exploring.

Mobile-marketing techniques clear-ly have the ability to cut costs and drive additional revenue. But it takes an investment in technology and some quick education to make it happen. My best advice: Find a partner who truly understands how mobile payments work and invest the time to expand your customer base by leveraging social media. The dividends will clearly pay off in the form of new revenue, an expanded marketing base and better customer retention.

Shelley Plomske is vice president of product for Total Merchant Services, a Woodland Hills, Calif.-based independent sales organization that provides small businesses with credit card processing, other payments solutions, and social-marketing services. Reach her at shelley@totalmerchantservices.com.

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