In 2011, mobile commerce made some real progress. Exactly which technology and companies will win is yet to be determined, but the amount of innovation being adopted by consumers armed with smart and connected devices in this space has never been greater.

For many merchants that have been following the topics of contactless payments and mobile commerce, the big questions are all about the cost of upgrading their point-of-sale (POS) equipment so that it can accept contactless payment and when it makes sense to upgrade.

Merchants recognize that upgrading their entire POS system would require a significant investment. This question of upgrading the point of sale is important, but it may not be the most critical question for merchants. For one thing, POS equipment manufacturers have already begun making their offerings compatible with mobile commerce. There are also peripheral devices available that equip a merchants’ existing POS system to accept contactless and mobile payments.

Because mobile payment is about a great deal more than replacing a card swipe with a phone tap, merchants have the potential to benefit from approaching mobile commerce as a new marketing opportunity that includes these capabilities (for starters):

• Targeted marketing – Merchants can take advantage of mobile wallet capabilities to extend personalized marketing offers and promotions directly to customers.
• Loyalty programs – Merchants can leverage loyalty card accounts that synchronize with digital wallets, so that real-time rewards balance information and redemption capabilities reside in the cloud and on the mobile device.
• Gift and prepaid cards – Consumers can and will increasingly store gift accounts in mobile and digital wallets, and opt to have gift card balances automatically applied to purchases to provide incentives for using their mobile device to pay. Consumers can also purchase and manage (e.g. reload) their gift card account from within mobile wallets.

Merchants can take advantage of these mobile wallet capabilities to offer more highly targeted customer service and value incentives. For more on what small businesses could be doing now, read our white paper below.

Dom Morea is senior vice president and division manager for advanced solutions and innovation at First Data.