Opportunity to enhance customer satisfaction, cost-efficiencies and productivity
The rapid rise in mobile technology usage and ubiquitous connectivity heralds the arrival of a mobile payments revolution. The world now stands on the cusp of a payments paradigm shift as businesses increasingly digitalise, turning to different forms of payments, including mobile payments, to reach today's digitally active consumer. This is especially the case in Singapore.
With a mobile penetration rate of more than 150% and more than 5 million 3G mobile subscriptions1, the Republic is one of the most mobile payments-ready countries in the world. There are huge opportunities for businesses to use mobile payments to enhance customer satisfaction, cost-efficiencies and productivity.
Mobile payments are just as accessible, if not more so, to small and medium-sized enterprises (SMEs). Large businesses are often hindered by red-tape and rigid infrastructure, which makes them slower to adopt new technology strategies. In comparison, SMEs are nimble and agile, well-positioned to drive the mobile payments uptake and innovation, and gain a commercial advantage.
5 ways mobile payments can become a business enabler for SMEs.
• Offer consumers payment flexibility and convenience: According to the Nielsen Global Survey of Saving and Investment Strategies, 60% of Singapore consumers prefer non-cash payment solutions such as debit and credit cards. Businesses that adopt mobile payments solutions can better cater to varied consumer payment preferences. The ability of mobile payments to provide flexible, convenient and secure transactions can help increase the customer base and encourage purchasing decisions.
Mobile payment solutions are also pragmatic solutions for SMEs that are constantly on the move. Examples of such industry verticals include logistics management, food and beverage, as well as hospitality services. Businesses that frequently engage in mobile events, door-to-door direct selling and delivery services can also benefit from non-anchored and instantaneous payment solutions
• Enhance shopping experiences for consumers: Mobile payments technology can help enhance the shopping experience for customers by reducing wait times and efficiently managing demand during peak periods. Improving check-out efficiency helps deliver a smoother shopping experience and reduces the amount of time consumers have to rethink their purchases before they reach the sales terminal. Using mobile payments solutions can help SMEs better manage a sudden influx of customers - during a sales event or a peak period - as transaction activities are not limited to fixed sets of point-of-sales systems.
In some cases, incorporating mobile payments technology in stores can also help to enhance brand image and a perceived element of trendiness. This is particularly evident in certain business segments, such as electronics or fashion retailing, where the brand appeal is partially influenced by the use of cutting-edge technology to improve the purchasing experience.
• Incentivise consumers with rewards or loyalty programmes: Mobile payment solutions offer SMEs the opportunity to integrate loyalty and incentive programmes to provide value-added benefits to customers. Mobile payments technology can help push in-store promotion alerts, e-coupons and discounts as well as provide intelligent and personalised recommendations that can increase customer loyalty, boost sales and raise revenue.
Mobile payments can also help combat show rooming - the dreaded practice for retailers when consumers enter a brick-and-mortar store to physically assess a product before buying it online at a discounted price. Businesses can now use mobile payment technologies to seamlessly integrate online and offline retail channels to create an omni-channel experience for consumers. Relevant product information or promotions are uniquely positioned to engage shoppers and encourage real-time physical purchases.
• Gain valuable consumer insights through big data: Through mobile payment solutions, SMEs can gain access to big data that is traditionally available only to large enterprises with expansive research budgets.
The pervasive use of smartphones creates a goldmine of consumer data that can be analysed to surface valuable insights on consumer behaviour. Mobile payments leave an electronic trail that can be used to track consumer preferences and shopping patterns to provide real-time customer knowledge. Equipped with accurate and timely information, SMEs can up-sell, cross-sell and present customers with "intelligent offers", enabling targeted marketing which translates into increased sales and improved customer satisfaction.
• Achieve better cash flow management and savings in payments processing: Engaging mobile payment solutions can help SMEs reduce costs associated with processing cash payments such as bank charges, transport and security overheads and leakage fees that are normally underestimated by merchants.
SMEs often face the very real problem of having to fund and sustain their businesses between delivering a product or service and receiving payment. The immediacy of using mobile solutions for payment processing can have a major effect on SMEs; it means businesses do not have to wait long for collections. SMEs, to whom cash flow management is a vital focus, can better assess their cash flow situations to aid critical decision-making.
Despite the strong business case for SMEs to adopt mobile payments, many SMEs still struggle to translate the interest in mobile payments to a plan for execution.
According to a First Data survey, 44% of SME respondents in Singapore feel that new payment acceptance technologies can make security an even bigger challenge for their businesses.
While security is not an unwarranted concern, SMEs can mitigate these risks by partnering with reputable providers that adhere to industry regulations.
There is also often a preconceived notion among SMEs that technology investment is expensive, but this does not always have to be the case. There are a wide range of initiatives to help SMEs invest in the right technology. For example, under the government's Productivity and Innovation Credit (PIC) scheme, local SMEs are eligible for a cash rebate of up to 60% (or 68% tax reduction) of their expenditure on technology.
Initially introduced in 2010 and enhanced in recent years, the PIC scheme is a tax incentive to encourage businesses to invest in productivity and innovation. It covers six areas of activities: buying or renting IT equipment, training of employees, obtaining and in-licensing IP rights, registration of patent, trademarks, designs and plant varieties, research and development activities and certain design projects.
SMEs can get actively involved in this scheme by adopting mobile payments technology to achieve competitive advantages in customer service, product sales and operational efficiencies.
1 IDA Singapore Statistics on Telecomm Services for 2014 (Jan-Jun)