Why Retailers Must (But Won’t) Succeed In Introducing Mobi

nohinehii · Junior Data inscrierii: 21/Dec/2014 Mesaje: 2

In the digital age, it’s critical for retailers to collect and manage customer data. This information is the key to providing personalization for any kind of shopping experience, as it allows retailers to understand customer preferences and analyze shopping histories.

Smartphone payment systems like Apple Pay are an important method of obtaining this data since they allow data collection across different retailers for the same individual. However, when the data is collected and controlled by a third party like Apple, it is risky for retailers.

Just imagine that you use Apple Pay and you’re heading out to a department store to buy holiday presents. Apple has such a complete history of your purchasing habits that your mere proximity to that store could trigger an advertisement or notice from a competing retailer to appear on your iPhone, enticing you to visit the competing store instead. As the holder of the data, Apple retains all of the power in the relationship and can charge hefty referral fees to retailers who seek to use that data.

To avoid this future where retailers know less and less about their own customers’ preferences, retailers need to succeed in establishing their own online payment networks that would allow them to keep their data in house. Yet there are several reasons why retailers are likely to be doomed to fail in this effort.

First, data security is a key issue in users’ minds. Recent news reports stated that CurrentC — a competing smartphone payment system to be used by retailers like Target, Best Buy and Sears — was hacked before it even got off the ground. Also, Apple is such a well-known brand with a history of digital data protection that it may prove difficult to entice customers to trust alternative platforms that do not have a history grounded in information security.

Second, there is the question of whether customers will use multiple payment networks. This is a concept called multihoming. You can see this issue with Uber, which is facing difficulties because customers can use Uber or its competitor, Lyft, by simply pressing a different button on a mobile phone.

It’s easy to be on both platforms at the same time. In the world of mobile payments, the opposite may well be true. Customers may find it more convenient to keep all of their payments on a single platform, especially if that platform (as is the case for Apple Pay) provides services, such as letting users search, sort and visualize their shopping expenditures. Customers would lose that functionality – and the ability to see the whole picture of their spending — if they use multiple platforms.

This is all good news for Apple, which is likely to remain the puternic player in this field for a while longer. And it’s bad news for retailers, who are losing control of their data.