Four Ways to Build a Mobile Payment System That Works

If you’re in the retail business, the holiday spike in mobile shopping likely has you restrategizing your e-commerce—or m-commerce, as mobile-based e-commerce is now known. Yahoo Small Business reported in December that Americans broke mobile shopping records on Thanksgiving, Black Friday, and Cyber Monday, spending $1.1 billion in three days via their smartphones and tablets.

Even before the season got underway, a Deloitte survey indicated that 68 percent of smartphone owners planned to use their devices for holiday shopping. And eMarketer forecasted that mobile devices would drive 16 percent of 2013 retail e-commerce sales—more than double the 2011 rate. By 2017, eMarketer predicts, m-commerce sales will nearly triple to $113 billion.

But retailers beware: “Those sunny prognostications ignore a giant fly in the ointment,” warns Ralph Dangelmaier, CEO of BlueSnap, a payment processor whose goal is “to convert more shoppers to buyers worldwide” and whose main competitor is PayPal. The fly he’s referring to is the abandoned mobile shopping cart.

Dangelmaier points to a recent Harris Interactive finding: two in three consumers abort smartphone or tablet purchases due to checkout snags. Other reports, he says, have found that consumers abandon mobile shopping carts more than 90 percent of the time—far more often than shoppers using desktop or laptop computers.

Yahoo Small Business connected with Dangelmaier, who was featured recently in the Boston Business Journal, to get his explanations for why shoppers abandon their virtual carts, and what retailers who hope to capture more mobile customers can do about it.

Reasons, Dangelmaier says, range from carts and sites that aren’t optimized for mobile, to high shipping costs, long delivery times, and window shopping.”

Another reason shoppers give up before completing a purchase—one that Dangelmaier says many merchants and analysts overlook—is a clunky mobile payment system: “Most mobile payment platforms still require too many steps to checkout, lack flexible payment models, have limited ability to offer promotional features like couponing, and completely ignore the realities of selling in a global economy,” he says. He predicts, “Merchants are bound to lose billions in mobile shopping dollars until these gaps can be closed.”

Here are four ways Dangelmaier recommends making your business’s mobile shopping experience one that won’t drive your customers to leave their cart in the virtual aisle.

Entering credit card information and other personal data is an even bigger hassle on small screens and keyboards than on full-size ones. And yet, one-click purchasing is still the exception to the rule in m-commerce, Dangelmaier says. In a sign of what’s to come, Facebook announced that it is testing one-click checkout for its partners’ mobile apps.

While e-merchants have embraced online subscription models for products from diapers to dog food, m-commerce sites process only the most basic subscriptions. “Mobile payment systems should be able to offer multiple plan types,” Dangelmaier says, “such as pay-per-use, trial with standard subscription, or initial charge followed by subscription.” Any payment cycle—daily, weekly, monthly, or some other permutation—as well as custom options, such as upgrades, grace periods, or maximum charge limits, should be accommodated, he says. “Systems should also be able to support any payment method as a subscription option, including wire and bank transfers, purchase orders, and e-checks.”

“Most mobile sites are handicapped when it comes to dynamically generating deals to drive sales, increase order value, or reduce customer churn,” Dangelmaier says. “Mobile payment systems need the ability to serve coupons, up-sells, cross-sells, free trials, product bundles, subscription update reminders, and other marketing offers on the fly, based on whatever the shopper has placed in the shopping cart.” He says these are the kinds of incentives that keep shoppers hanging in there long enough to hit the checkout button.

It might seem obvious, but “a shopper in France doesn’t want to see checkout pages in English or cart calculations in dollars,” Dangelmaier points out. “Mobile payment systems need to display content, currencies, and payment methods based on the shopper’s location.” He suggests checking out multi-country methods like WebMoney, CashU, and Skrill; Alipay in China; Giropay in Germany; and Boleto Bancario in Brazil.

If your business is ready to capitalize on the mobile shopping trend, Dangelmaier says it’s crucial to remember: “It’s all about the buying experience.” To be ready for the 2014 holiday mobile shopping spike, adapt to mobile platforms a.s.a.p. and offer fast, full-featured, marketing-savvy carts. Dangelmaier promises that if you do, “fewer carts will be left holding the bag, and the m-commerce juggernaut will gain even more speed than the pundits are predicting today.”