October 16, 2018
By: Steven Anderson
We know mobile payments have a lot of different uses. Added convenience, improved customer experience…these are just two functions of adding mobile payments. A new look at the market from PaymentsSource, meanwhile, suggests that mobile payments could be a bigger value than expected for their cost-savings advantages for businesses.
Essentially, as PaymentsSource noted, businesses actually pay costs to do business in cash. There’s the cost of storing it, of securing it, of running it down to the bank for processing and further securing, and so on. Many of these points are addressed with payment cards, but payment cards come with cost issues of their own. There are the outright costs of payment processing, as well as the hidden costs of infrastructure.
Mobile payments systems—particularly mobile wallets—meanwhile offer up some real advantages that may mitigate many of these costs, and actually remove some costs from the system. For instance, a mobile wallet can use a store-branded card as its base which removes interchange fees. Since it can also be connected directly to a loyalty program function, it can also spur future business by rewarding customer purchases.
There’s even the potential for mobile wallets to serve as roaming checkout stands, allowing customers to bypass the line and have an even better experience. Just to top it off, there’s a reduced risk factor; while a store owner might get held up for his or her cash, his or her mobile wallet interfaces will likely stay safe all around.
While all of this is perfectly valid, there’s one point the PaymentsSource report didn’t seem to consider: the vast inertia of cash. People use cash because it goes everywhere and pays for everything. Sure, there’s some risk. It’s desirable, which makes it a prime target for theft. It can be lost easily. Take a dollar bill outdoors on a windy day and let go of it for a second for proof. Moreover, there’s a generational problem; Gen X, baby boomers, and Gen Z all prefer it to mobile.
But yes, in the end, mobile payments can be a cost-saving measure. Though going mobile-only could actually raise more costs than it saves, like the massive opportunity cost of turning away customers with cash money.
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