In North America, if you run a traditional business, you may be used to having your customers pay you by cash or credit card, but would you be surprised to learn that this is hardly ever the method of payment in Asian countries like China, Japan or South Korea? Young people in China for example use their mobile phones almost exclusively for transactions for everything from clothing to food – even for tipping street performers.
So the question is, could a similar model be adopted here in North America? We believe it can. On demand apps are skyrocketing in popularity and traditional brick and mortar businesses would do well to adopt some of this technology in order to stay current.
The China Model
In China, there are two apps that dominate the mobile payment market. These are WeChat Pay and AliPay, which are owned by tech giants Tencent and Alibaba respectively. With scannable QR codes, businesses ranging from supermarkets to taxi-drivers can receive payments simply by having customers scan the appropriate codes with their phones. Over the last 15 years the mobile payment market in China has grown to more than $16 trillion.[i]
In this model, anyone can become an entrepreneur since you don’t require expensive equipment like cash registers, nor do you have to sign long term contracts with credit card companies in order to obtain a scanner.
How On-Demand Pick Up Apps Could Benefit North American Businesses
Even in North American, where payment by credit cards is still more popular than mobile payments there is still every reason to believe that the uptake here on mobile payments will continue to grow. We are already seeing it in businesses like Starbucks as well as apps that allow you to pay for city parking with your phone.
Consider for example how on-demand pick up apps could benefit a busy restaurant. Instead of having a dedicated staff member to work the till, the restaurant has can have its entire staff freed up to make and serve food. Customers picking up their order are served in a fraction of the time because the order is already paid for.
We are seeing the same kind of thing in the retail sector with Loblaws Click and Collect and Wal-mart Pickup both using similar technology that allow customers to make their purchases online and then pick up at the store.
But these on-demand pick-up apps do not only present an opportunity for large established businesses. They actually help to even the playing field for new smaller businesses because they are so accessible. For example, on-demand pick up apps could present an opportunity for the new marijuana dispenseries which will be opening in Ontario in April of 2019.
Not only do these apps help to create a better purchasing experience for customers but they help the businesses as well as it potentially means having to hire less staff while the potential for fraud and theft also go down.
All This and Customer Data Too!
Finally, on-demand payment apps can also provide businesses with valuable customer information which they can use to increase their marketing and sales. For example, if a customer uses an app to pay for a box of newborn sized diapers, it could be a cue to the business to start sending them information about other infant products as well. Data is collected with each payment to eventually build a profile of each customer that uses the app.
Today the on-demand economy has created some very real competition for brick and mortar businesses, and these brick and mortars will have to adapt if they are to thrive. While the uptake may be slower here in North America than in Asia, the wave of mobile payment systems is coming. It’s best to be ready for it.