Interview: MpayMe's Moran Lerner on why simplifying mobile payments and offering reward programmes to users is key to adoption.

We interviewed Moran Lerner, Senior Vice President (Partnerships and Alliances) MpayMe, a global business technology company. It has created a platform called ZNAP, which optimises transactions through the bundling of secure multi-channel mobile payments with value added solutions. Lerner shares his views on where the UK's mobile payment industry is heading and what it takes to encourage consumers and retailers to migrate towards mobile payments.

Adoption of mobile payments in the UK has been slow. What seems to be holding back users?

For years, the mobile payments world has been flooded by technology companies offering slick and quick innovative methods for customers to pay at retailers. The problem that has hit every one of these companies has been the same – critical mass. Today, consumers would download an app and can use it at a handful of retailers, so this falls well short of exciting a consumer to use something that is not widely accepted. Building a network of retailers for consumers to spend at is not an easy task. But herein lies the problem. Retailers, banks, mobile operators and the likes – they all want to control and "own" the customer experience.

The moment you dictate to a consumer wanting blue that they must have red, or yellow, you've disconnected yourself from that consumer. Is a consumer loyal to a Tesco? If they are rewarded by endless points redeemable for products, then they can be coerced into shopping for something at a Tesco. But then Sainsbury's and the lot will put similar "rewards" in front of a customer, and it becomes a rational choice rather than an emotional "loyal" one. If a consumer wants to buy a Coca Cola, then that same consumer will gladly go to the store nearest to them to get that Coke rather than travel 20 minutes to the nearest Tesco to get it.

Consumers have an affinity with brands, not retailers. And more often than not, the major brands in fashion, FMCG, electronics etc. are available at multiple retailers. So if you can get the brands that have the emotional connection with consumers to have a way to interact with those willing and loyal consumers, then the consumers will have far more places to get what they really want, in a unique experience only a brand can offer them, and the incentive then sits with the brand to get their retail clients to get involved with the medium that can get these masses of consumers buying them, wherever they may be sold.

How can payment applications help promote loyalty schemes?

The first thing is by understanding the difference between reward and loyalty – rational decision-making vs. emotional decision-making.

Apart from simplifying the way to pay, our research shows that customers are more likely to use payment applications if they also make it easy to redeem loyalty rewards. Customers want to feel valued for giving someone their business. They like offers and incentives that delight and surprise them and match their individual preferences. But equally important is the effort involved to get their perks. Redeeming a special offer shouldn't feel like work- it should feel like a treat.

The right mobile payment platform needs to support seamless offer redemption by making it easier and more efficient for consumers to enjoy their rewards directly via the app at the time of purchase.

How can loyalty schemes help retailers retain customers?

So how can payment Apps help in this? Well they can be created to be more personable and interactive, but at the point of the shopping experience rather than as an annoying app that spams a thousand irrelevant messages. The application needs to be able to learn about the consumer at a personal level, understand their needs and wants, and then seamlessly be able to give it to them. This is no easy task in any way, but the aim is to at least try achieving that as a goal. So by being able to offer consumers the ability to have an application that knows they are "loyalty" members of 20 different stores and can make the use of that reward card something that happens in the background and can offer instant gratification without the need for that consumer to pull out a purse or wallet of 20 different cards and have to be met with the confusion of trying to calculate how many points they have, what it can give them, what else they get... It needs to simplify the experience rather than complicate it. So a rewards program can instil loyalty if it enhances the shopping experience rather than make it hard work. Loyalty will come to those retailers who offer their consumers the right experience, not the right rewards. There is always a competitive retailer who may decide to offer more reward, and the "loyalty" will quickly become a mass migration.

When you look at the food industry, and we can focus even more specifically on restaurants, as a consumer, you will have an emotional desire to eat a certain type of food, and this will change depending on what is available around you, what you have a craving for, what time of day it is, the time you have to eat etc... You won't go to a fine Italian restaurant because you fancy some gourmet lasagne and make the decision simply because you can earn 25 points that after 20 similar purchases may reward you with a free drink. Some fast food chains may have bundled offers to encourage upsell, and coffee chains may have these points systems, but if you are a coffee lover and much prefer Café Nero to Starbucks, then it doesn't make a difference that you can get a free shot of espresso at Starbucks with their membership card. The choice is made out of personal preference. The decision only becomes rational when you need a cup of coffee and the only coffee shop within 25 miles of you happens to be a Starbucks. The App needs to give the user what they want at the time they want it rather than reward them for something they don't.

How does the retailer fit into the world of mobile payments?

Today, accepting payments at most retailers is not a problem that needs to be fixed. All can accept cash, and over 95 per cent can accept cards in some way. The problem affecting retailers is more business operations related. They all want to bring in some form of new innovative solution that also has a payments element to it. But many retailers have the issue of the new technologies not being compatible, or accepted, by the existing technology infrastructure. Integrating a new payment technology into existing rigid till and stock management systems can be a hugely expensive and lengthy project that quickly puts retailers off. So whatever the solution is, it has to meet and complement existing systems at the very least, but also prove to deliver real solutions in areas outside of just payments. As an example, many retailers advertise in print publications. But existing technology of tills cannot give consumers the ability to purchase straight off that advertisement. So retailers can never realise any ROI on the advertising investment, nor track in any way how effective the advertising is with increasing sales. It's called the Holy Grail of closing the redemption loop.

Other benefits a mobile solution should fulfil for retailers is no further major investment in infrastructure, and the ability for the retailer to interact with the consumer in a personable and relevant manner, but in real time, during the shopping experience, thus enhancing the experience for the consumer while promoting products or offers that are relevant to that consumer and would potentially increase the retailer's ability to sell more products. Bringing the retailer's loyalty or reward program into the solution seamlessly is also a major plus, as this too will further enhance the consumer experience.

Basically, whatever the solution is, it must be able to meet the real business needs of the retailer, and for the long term, not just an off-the-shelf solution that will be a nice gimmick today but be redundant tomorrow. And critically, it needs to be one seamless solution that can deliver all of these needs in the eyes of the consumer.

MPayMe has developed a new mobile app called ZNAP, which the company describes as a mobile business platform. Can you tell us more?

ZNAP simplifies and enhances key merchant and consumer interaction touch-points, across multiple channels, and across multiple business requirements, one of which is the payment process, by creating a quick, and secure payment method that can be used in-store, online, off the page, or for paying bills. To make a payment, a user simply scans a QR code which invites the user to purchase exactly what they are looking for – by being able to select details such as size, quantity and colour, all in-App.

The retailer can also choose to define the information behind the QR code in the form of a full menu or catalogue, meaning a user can scan a code once, bring an entire catalogue, or food menu if it is a restaurant, and then make their selection of goods to purchase all within a single mobile application, and complete the purchase with pre-registered payment cards seamlessly and easily.

The user then moves on to the next stage where they can redeem any loyalty points and/or vouchers- a key driver to keeping customers interested in a brand, still within the same application.

Have you had any feedback from UK consumers?

We just completed a successful pop-up shop collaboration with Bengt Fashion, an online fashion boutique that spotlights carefully selected collections from emerging British and international designers. The one day event, which took place at Shoreditch House, invited guests to purchase the latest summer fashions using the ZNAP mobile business platform.

Over 70 per cent of shoppers at the event chose to download and use the ZNAP app to pay for their purchases. They also commented on its ease of use. All they had to do was scan a QR code using their mobile and enter their PIN to complete the payment.

It may not seem evident at the moment but consumer preferences for paying are changing faster than people think. According to the UK Payments Council, the use of debit and credit cards will decline within eight years and this decade will end with more people using mobile apps. MPayMe hopes to become one of the leaders helping to shape the future of payments- not just in the UK but globally too.