Retailers push into crowded mobile payment market
Autor: DJ SAPÃO MAFIADOFUNK | Publicado: 2014-04-06T06:04:00-07:00

A
 Wal-Mart representative demonstrates a Scan &amp; Go mobile payment 
application on a smartphone in San Jose, Calif., on Sept. 19, 2013.




BERLIN
 - Big retailers are muscling in on the likes of Visa, MasterCard and 
Google in a fiercely competitive and growing mobile payment market that 
promises to cut transaction costs and increase customer loyalty.

Stores
 such as British supermarket Tesco and France's Auchan hope their 
"digital wallets" - apps which allow users to pay with their smartphones
 rather than cash or cards - will also give them more comprehensive data
 about customers' shopping habits than ever before so they can target 
advertising.

They are joining a crowded market - banks,
 card companies and tech firms like Google and Apple are all entering 
the mobile payment business, each hoping their app will become the 
industry standard. eBay's PayPal, well established in e-commerce, is 
also experimenting with the technology.

Retailers hope 
to attract customers to their own services by giving discounts and 
rewards to those using them, while also linking payments automatically 
to loyalty schemes and offering features like saved shopping lists.

The
 global market for mobile payments is forecast to grow about threefold 
by 2017 to some $721 billion worth of transactions, with more than 450 
million users, according to research firm Gartner.

The 
growth could benefit retailers as the competition from a host of payment
 providers should help drive down the fees stores pay to have 
transactions processed - a service currently dominated by banks and card
 firms Visa and MasterCard.

"We view merchants as 
overall beneficiaries of the trend toward mobile payments," said Morgan 
Stanley, which estimated retailers in developed countries spent up to 
$150 billion in 2012 to accept card payments.

"Expected
 returns should justify any incremental investments required in enabling
 mobile payments technology," it said in a report in January.

However,
 it is still unclear how the retail mobile payment market will develop, 
with card companies and banks seen retaining a leading role in 
processing payments even if physical cards become obsolete.

Retailers'
 apps might struggle to take off as customers are unlikely to be willing
 to use a variety of services for different stores, but the success of 
Starbucks Corp in combining mobile payments with promotions shows big 
players can succeed.

U.S. RETAILERS

Starbucks,
 the world's biggest coffee chain, launched its mobile payment and 
rewards app in 2011. It already has 10 million users and the firm said 
this month it is looking for ways to expand the program beyond its own 
network.

"The mobile payments platform has given us a 
higher degree of frequency and higher degree of loyalty and the question
 is how can we leverage that beyond our stores," Starbucks Chairman and 
Chief Executive Howard Schultz told CNBC television.

An
 alternative path is also being explored in the United States, where 
dozens of top retailers including Wal-Mart, Target and Best Buy have 
announced plans to set up a joint digital wallet service - the Merchant 
Customer Exchange, or MCX - though no launch date has been set.

Meanwhile,
 an attempt to create a mobile payment app universally accepted by 
retailers has recently launched in Germany. Yapital, owned by e-commerce
 firm Otto, has gone live in thousands of stores and also allows users 
to pay online and make peer-to-peer transfers.

Yapital 
Chairman Nils Winkler expects just a few players to survive of the 200 
initiatives now clamoring for attention in Europe, with apps tied to 
retailers more likely to win out than those being developed by telecom 
and card firms.

"The biggest success in this field will
 be retail-based. PayPal is a good example that has grown tremendously 
based on the retail success of eBay," he said.

"CLEAR BUSINESS CASE"

Tesco,
 the world's third-largest retailer which pioneered the tracking of 
customer behavior with its Clubcard loyalty card two decades ago, will 
launch its digital wallet this year, as it also starts offering current 
accounts.

That is part of the British supermarket 
chain's eventual plan to use smartphones - and its own-brand Hudl tablet
 computers - to allow customers to navigate stores with their devices 
and scan products to buy them as they shop.

Sophie 
Albizua, co-founder of UK-based retail consultancy eNova Partnership, 
said her clients were ready to invest in overhauling outdated till 
systems to enable mobile payments. "People spent the last five to 10 
years fine-tuning their websites. Now they have time to focus on 
something else."

French supermarket group Auchan, 
Europe's fifth-biggest retailer, launched its "Flash and Pay" electronic
 wallet about a year ago. It combines payments with coupons, loyalty 
cards, receipts and a shopping list feature.

"Our 
objective is to minimize costs. To have alternatives to existing 
solutions. All other solutions try to make costs for merchants," Arnaud 
Crouzet, Auchan head of global payments, told the Merchant Payments 
Ecosystem conference in Berlin.

"It is difficult to imagine our data on our customers going through a third party," he added.

Britain's
 Centre for Economics and Business Research said there was a clear 
business case for digital wallets in terms of reduced costs and improved
 customer service and sales.

UK retailers could have 
saved 463 million pounds ($770 million) in transaction costs in 2013 by 
shifting to mobile payments from cash, credit and charge cards, it 
estimates.

Mobile payments could reduce queue length in
 stores by speeding users through tills and cut the cost of handling 
cash and card payments, it said.

Handling cash - which 
accounts for over half retail transactions by volume in Britain - is 
costly for retailers as it needs to be counted and guarded, costs 
equivalent to about 2.5 percent of takings, compared with about 2 
percent for processing cheques and 1 percent for debit and credit cards.

However Carrefour, the world's second biggest retailer after Wal-Mart, thinks shoppers need more time to be convinced.

"For
 the moment, cards are still a good solution, especially contactless 
ones," said Frederic Mazurier, a vice-president for finance and risk 
management at Carrefour Banque. "It is going to take quite a few years 
more."

($1 = 0.6011 British pounds)