by Carlos Häuser
November 12, 2015

Mobile payments have to offer more than convenience. By using big data and analytics, retailers can find ways to add value.

In a landmark report on the status of big data in retail, IDC called big data and analytics “the defining basis of retail competitive advantage.” This finding holds special significance for the growing mobile payments sector, where the success of mobile apps and wallets over traditional forms of payment requires a keen, multi-faceted understanding of customer behavior.

In order to drive adoption, mobile payments need to provide users with more than just cashless convenience, they must also offer added value that is relevant to both the individual person and the situation at hand. Big data – that is, the ability to collect and analyze enormous quantities and varieties of data – promises to make that level of insight possible.

Big data could provide better customer segmentation

In fact, mobile payment professionals have already begun to identify the best use cases for big data in this space. According to a survey of industry experts at Mobile World Congress, 36 percent of respondents said that targeted, real-time offers to customers would be the most useful application of big data. And 27 percent said that big data could provide better customer segmentation.

That’s why more and more retailers are using the possibilities of beacon technology to deliver real-time, product-specific coupons to customers’ mobile devices, based on their in-store locations. For instance, a shopper in the shoe section might get a discount on last season’s boots, while someone looking at pants would receive an offer for a free belt with the purchase of a pair of jeans.

It’s quickly becoming reality

A wholesale grocery company has also suggested that mobile location data could be used in conjunction with other data sources – for example, to alert customers when they are in the vicinity of an item on their shopping list. This would enable shoppers to check off and, of course, pay for their groceries with a mobile device. And the store would be able to offer relevant discounts on an individual basis, with the opportunity to upsell particular brands.

Compared with the old method of delivering mass coupons through the mail, these scenarios sound positively futuristic. In fact, they’re quickly becoming reality. But they require serious buy-in from consumers. Apps need permission to access the location information on users’ devices. Are people really willing to let retailers trace their footsteps through stores?

Personal data enables more individualized retail offers

They are in the U.S., according to Peggy Anne Salz, the founder and lead analyst at MobileGroove, a research and consulting company for the global mobile sector. Salz has found that U.S. consumers are more willing than other markets to share their data, as long as the value proposition is clear and convincing.

“Millenials in particular know that personal data is worth something,” Salz says. “They see it as a tradeoff for better, more individualized retail offers.”

That last point is crucial: Mobile payments will have to bank on more than their novelty factor if they are to outpace cash and credit cards at the register. And big data offers a way to make mobile payment options advantageous to customers and retailers alike. Some retailers have recognized this and are beginning to make big data and analytics a priority in their business. But many others must follow, or risk getting left behind.