Interest in cashless mobile payment remains cautious, but this is set to change in the foreseeable future. Those offering their customers a comprehensive mobile banking service including a payment function set themselves apart from other providers by providing an excellent customer experience, and can strengthen customer loyalty. The technological requirements and the market’s maturity level are good reasons to get involved now.
Only a fifth of “digital Germans” are generally open to mobile payment solutions at present. This was the conclusion of a study of 4,000 participants conducted by Postbank this year. Of these people, 14% are already using mobile payment. Among the under-35s, one fifth reach for their digital wallet. The ING-DiBa also analysed Germans’ payment behaviour and set this in a European context. Around 90% of the 1000 consumers surveyed said that they often or nearly always carry cash. This figure is well above the European average of 79%. In France, as few as 35% of people leave the house without carrying any banknotes or coins.
For Thomas Mangel, Postbank’s Chief Digital Officer, cashless payment by smartphone has significant potential, including in Germany: “The mobile payment market is still really young and the demand for quick yet secure digital solutions is constantly growing. If there is an increasing number of offers, more and more people will see the benefits of mobile payment options and discover these for themselves. Anyone who has encountered these smart, convenient solutions will want to use them more often.”
Good reasons for cashless payment
There is no doubt that mobile payment is extremely convenient. Instead of wasting energy rummaging around in purses for change, customers can pay amounts between one cent and five euros by micropayment using their smartphone. Payment at machines, to pay for parking for example, would be quicker with mobile payment services. The process is not just easier and more flexible, it is also considerably more secure than walking around with large amounts in cash and risking having these stolen.
One significant reason for scepticism, which is still widespread, is worry about becoming overly reliant on technology in everyday activities such as shopping. There are doubts about whether older people could even understand the apps. In addition to these comes an objection which relates to cashless payment in general, including card payments and online shopping: all of these processes are abstract and allow the person making the purchase to forget that they are actually spending money. One third of those surveyed in the Postbank study admitted that their relationship with money has changed as a result of this. The less money is physically handled, the harder it is to keep track of it.
Integration into mobile banking
Banks and other financial services providers can best counter these justifiable concerns by taking a holistic view of the topic of
mobile payment. There should be greater integration of relevant applications into mobile banking. A good “branch in a pocket” distinguishes itself through its ability to ensure banking customers are always in a position to keep track of their current financial situation. Ideally, customers will even be warned before making a payment that they cannot afford.
For example, Postbank takes an integrated approach by offering mobile payment via the “Finanzassistent” mobile banking app. Customers make cashless payments using commonly available NFC (Near Field Communication) technology, which involves wireless transmission of data via electromagnetic induction. They move within their usual mobile banking environment and retain an overview of their overall financial situation. The service’s particularly user-friendly activation method contributes to an optimal customer experience. If the “Postbank Finanzassistent” app is installed on an NFC-enabled smartphone, the customer just needs a credit card and an ID to set up the service.
Time to come on board: the mobile payment market is coming together
The blog Paymentandbanking sees the German mobile payment market as being at a consolidation stage. Whereas at its peak customers could choose between over 40 providers, the number of solutions available had decreased to just over half of this by the end of September 2017. As well as Postbank, Deutsche Bank, Targo Bank, Volksbanken Raiffeisenbanken, the Sparkassen Finanzgruppe, and associations that have joined the German banking industry via Girocard all offer their own cashless payment apps.
Anyone entering the mobile payment sector today will find it a good environment: evolved apps such as our Mobile Banking offer customers the necessary security and provide transparent information on their current financial situation. This allows customers to minimise the risk of spending more than they can afford when making cashless payments. The user guidance is intuitive and easy for people of any age to understand. Last but not least, the open architecture allows institutions to integrate the mobile payment app without much need for implementation.
Find out more about our Mobile Banking and create the right conditions for you to enter the promising mobile payment market!