I was recently looking at the success of the music-streaming service Spotify as it relates to the area of monthly subscriptions — something that is somewhat of a “holy grail” for news media.
Spotify’s subscriptions have rocketed over the past three years on the back of mobile payments, specifically direct carrier billing (DCB). In other words, it charges directly to a monthly, mobile phone bill.
Spotify representatives told me as far as they could see, the news industry in general “gets it all wrong.” When we ask readers to buy a subscription, we normally ask them to click on a link then fill in all the (sometimes long and arduous) details such as name, address, and phone number. Then we ask them to click to another link to put in all their credit card information. Then, “if they’re still awake” (Spotify’s representatives’ words), the readers are finally asked to click to buy a subscription.
What Spotify did was reverse the payment model.
All you need to do to buy a Spotify subscription is put in your mobile phone number. That’s it! You’ve bought a subscription. What happens is you receive a text message that says, “Congratulations you’ve bought a monthly subscription for (currency amount) monthly. Click here to complete your registration,” with a link to the registration page.
Note that the payment has been made upfront. Therefore, the drop-off rate is zero because the reader will fill in his or her registration as if it has already paid. Food for thought?
This touches on the whole conversation about making it frictionless for readers to pay for our content.
In the history of payments, people have been constantly looking for simplicity alongside security and convenience measures. Coins, banknotes, cheques, and, most recently, debit/credit cards have all been brought to our markets with the ultimate aim of making payment easier. Mobile payment technology challenges these more traditional methods by offering consumers a convenient and frictionless experience.
There has been a dramatic rise in activity in the mobile payment arena over the past couple of years. Android Pay, Apple Pay, and Samsung Pay have all played a key role in generating consumer awareness and driving adoption. As it all accelerates, it’s crucial to keep up-to-speed with the technologies and trends shaping mobile innovation.
As mobile payments begin to enter the mainstream (consider Starbucks, for instance), much of the talk and promotional effort is focused on the convenience and simplicity brought to the payment system. For many industry people, there is also a focus on delivering a better experience to the consumer.
As can be seen with successful mobile applications (such as Starbucks), intelligent, value-added services are the key to establishing a rewarding reason for use by the public at large. It’s also quite a sobering thought that there is an estimated US$1.4 billion sitting on Starbucks loyalty cards in any given quarter.
Currently, efforts are often limited to specific sellers, cardholders, apps, locations, or maybe specific mobile operating systems. With Starbucks, part of the company’s success is users can earn and deploy their loyalty points with any smartphone, anytime and anywhere.
Machine learning and analytics, which are predictive, are another way for banks and retailers to build a better (buying) experience. Mobile apps can utilise huge amounts of customer data to deliver smart and useful recommendations.
Overlaid, technologies such as Augmented Reality (AR) are now enabling consumers to study product information and read other customers’ reviews while in a store in real time as opposed to having to research at home before venturing outside.
By 2020, consumers will expect a lot more than just convenience from their mobile payment options. Success will be dependent on the integration of value-added elements.
Biometrics (such as thumbprints and facial identification, as per the new iPhone ) have already emerged as a way to increase consumer usage through an extra, more visible layer of security. This increasing presence of biometric technology within payment ecosystems has been driven mainly by the mPay platforms. For example, Android Pay supports various biometric authenticating methods, from fingerprints to facial recognition.
The involvement of key technical industry participants is critical to stabilising the deployment of biometric technologies within a payment context. But despite the progress made, there are still some issues to contend with. For example, only the most expensive, high-end devices have the functionality to support biometrics, which limits adoption.
By 2020, however, biometrics are likely to have advanced considerably. Ongoing device and software upgrades plus new product launches are likely to increase the number of devices supporting biometric authentication. We also expect to see an expansion into what we perceive to be biometric methods.
Technologies such as iris/eye recognition (used in some Chinese supermarkets already), heartbeat analysis, and even “vein mapping” are being touted as possible alternatives to bring about better accuracy and efficiency as well as security. Biometric characteristics can be seamlessly co-opted into the payment process to maximise consumer convenience.
The rise of wearables will also affect this whole payment environment. Smartphones are currently the dominant form factor. However, the continued development of the wearables market suggests the idea of “everything on a smartphone” could soon be questioned and what we perceive “mobile” could shift. Is it a device, a connection, or even a behaviour? The latter opens up our minds to the possibilities of what mobile can and/or will be.
The current market is kind of based on single application devices, like health and fitness trackers. That drives adoption as consumers are given a clear and single reason to purchase the product. Manufacturers, however, are now working to incorporate additional features to drive a much wider adoption and repositioning of wearables as an everyday essential (think about the Apple Watch, for instance).
Integrating a payments functionality is part of the strategy. Wearables on a consumer mean efficiency in regard to contactless transactions. Indeed, wearable payment mechanisms offer a real point of difference compared to contactless cards and smartphones, as there is no need to search your pocket or bag. It’s all frictionless.
As the wearables market continues to evolve, and increasing numbers of sophisticated and powerful devices become available, analysts predict wearable tech will account for a significant portion of the future mobile payments market. The media industry must be aware of this shift and ensure future reader and advertiser solutions and offerings take into account wearable technology.
It is hard to predict the exact direction the payment industry will take over the coming years. But what we do know is the introduction of new technologies is changing our landscape, presenting many new opportunities (and a few challenges for sure).
The pace of change means planning and preparing for the future is paramount. By doing this — and implementing strategies based on simplifying and building a better experience — media can find success in the world of mobile payments.