Mobile Payments Today: February's best reads

March 2, 2017 | by Will Hernandez

Cover photo: istock

Starbucks often garners more attention than payments companies when it comes to mobile. And that happens for a very good reason.

The coffee giant leads the way as far as merchant-branded mobile payments are concerned, so much so that a slew of retailers are trying to mimic Starbucks' success. But even good fortune comes with a downside.

Starbucks in January said that the mobile order and pay feature in its popular app might have hampered its earnings. The feature's success led to operational issues at its busiest stores. Mobile Payments Today discussed Starbucks' problem with industry observers and that article was the most popular on the site in February. 

Rounding out the top five stories from last month are articles about traditional payments and digital natives; airlines' mobile payments strategies; how recent earnings reports show the future of mobile payments; and how emerging payments affect merchant acquirers.

5. "The persistence of traditional payments among digital natives" — Marketing strategies devised for millennials by older generations have been based on bad intuition, poorly curated data, and unquestioned, incomplete assumptions. That leads to bad guesses. When you're designing banking and payment systems for your next generation of customers, bad guesses can be expensive.

They may be the most closely tracked generation in human history. But it's remarkable how much we've gotten wrong about millennials.

Marketing strategies devised for millennials by older generations have been based on bad intuition, poorly curated data, and unquestioned, incomplete assumptions. That leads to bad guesses. When you're designing banking and payment systems for your next generation of customers, bad guesses can be expensive.

For instance, it is accurate to call millennials (a.k.a. Gen Y's) the original "digital natives." They were the first generation to grow up online, with a comfort with networks that spawned a radically distributed approach to commerce. Peer-to-peer sharing, a threat to existing models, was an opportunity for new entrepreneurs.

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4. "3 success factors behind airlines and their mobile payments strategies" — As airline passengers increasingly turn to smartphones and other mobile devices to book and manage their flights and related travel arrangements, airlines have the opportunity for significant new revenues.

As airline passengers increasingly turn to smartphones and other mobile devices to book and manage their flights and related travel arrangements, airlines have the opportunity for significant new revenues. Like other industries, however, carriers are leaving too much of this revenue potential on the table.

While airlines haven't entirely overlooked mobile technology, not all carriers are able to capture robust information about mobile's impact on their business and, in some cases, they have not overcome technical limitations on the use of mobile payments.

So questions remain: How many airlines, for example, currently are viewing the mobile channel as a key revenue generator? And how does adding mobile payment capabilities impact an airline’s revenues and profitability?

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3. "Recent earnings reports show the future for mobile payments" — Facebook's mobile-first mentality has become a rallying cry of sorts for other companies, whether they're in the payments industry, or a retailer such as Starbucks.

Mark Zuckerberg raised eyebrows in 2012 when he said Facebook, from that point forward, would be a mobile-first company.

Zuckerberg's reasons for the new direction were clear at the time: Consumers were using smartphones more than desktop computers; they were spending an incredible amount of time on said mobile devices; and Facebook thought it could have better advertising success on mobile and make more money.

Five years later, Facebook touts 1.7 billion active monthly mobile users, according to its latest earnings statement.

Facebook's mobile-first mantra has become a rallying cry of sorts for other companies, whether they're payments providers or retailers such as Starbucks. And you don't have to look much farther than current earnings reports to spot the trends.

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2. "How emerging payments impact merchant acquirers" — With the landscape of payments acceptance constantly changing and new disruptive technologies entering the market, a merchant acquirer must be constantly looking at how to adopt these solutions.

With the landscape of payments acceptance constantly changing and new disruptive technologies entering the market, a merchant acquirer must be constantly looking at how to adopt these solutions. Merchant acquirers must assess the impacts of implementation to their platforms and the consequences of passing on an emerging technology.

Even though some emerging payment technologies are not widely accepted or even broadly adopted by consumers, the acceptance of these technologies can create opportunities for merchant acquirers to differentiate themselves in a highly competitive and relatively commoditized industry. Every acquirer accepts the major issuing brands and debit cards, but not all acquirers accept these new technologies.

The consumer is king and he drives what merchants need to support, attract and retain him as a customer. Thus, if an acquirer's offerings can't help a merchant meet its consumers demands, that merchant may take its payments business elsewhere.

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1. "What restaurateurs can learn from Starbucks' mobile ordering challenges" — Starbucks said it faced operational challenges at some of its stores where mobile ordering is popular. How Starbucks responds to this challenge is something the industry will closely monitor as mobile ordering becomes a standard feature for many fast casual chains as well as a revenue generator.

While Starbucks is not the first fast casual restaurant to roll out mobile ordering, it generates the most discussion from the industry when it comes to mobile strategies.

The coffee giant faced this again late last week when it revealed in its latest earnings call that the mobile order and pay feature in its popular app might have hampered its earnings. Although the chain reported that its Q1 comparable store sales were up 6 percent in China and 3 percent globally and in the U.S. and Americas during for the 13-week period ending Jan. 1, transactions fell 2 percent. About1,200 locations now get 20 percent or more of their orders through mobile order and payment. Only 13 units hit that mark this time last year.

"The tremendous success of mobile order and pay has also created a new operational challenge in our highest volume stores that has been building for several quarters — significant congestion at the hand-off plane," Kevin Johnson, Starbucks' president and chief operating officer, said during the earnings call. Johnson will take over as CEO in April when Schultz steps down to concentrate on growing the Starbucks retail brand.

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Topics: ATMs, Bill Payment, Bitcoin, Card Brands, Carriers / Operators, Contactless / NFC, Direct Carrier Billing, EMV, Handsets / Devices, HCE, In-App Payments, Loyalty Programs, Mobile Banking, Mobile/Digital Wallet, Mobile Marketing, Money Transfer / P2P, POS, Restaurants, Retail, Trends / Statistics



Will Hernandez
Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago. View Will Hernandez's profile on LinkedIn

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