Mobile Wallets Leverage Consumers’ Payment DNA

by Raymond Pucci 0

Build a mobile wallet with integrated features and consumer adoption will take off. So far, this has not been the case with the vast majority of US merchant mobile wallets and payment apps. As the following article relates, existing technology and integrated transaction features will significantly enhance a customer’s experience.

The global payments landscape is a complicated place. Technologies like digital retail wallets have made it easier than ever before for us to tap, swipe and pay. New innovations allow us to scan barcodes, add to shopping carts and receive geo-targeted updates, discounts and offers on the go. While mobile payments continue to grow in adoption, with eMarketer predicting a $10 billion increase in mobile payments by the end of 2017 in the US and Visa Europe forecasting that 60% of the UK population is expected to use mobile payments at least once a week by 2020, the mobile retail wallet is still nascent and has experienced limited, but growing, success. Mobile wallets enable brands to fully serve their customers with integrated value-add features combining payment and rewards. By combining payment methods with sophisticated personalisation features, we can now store and use tokens of digital value such as gift cards, coupons and loyalty rewards in merchant specific apps. Meaning, if we choose to use a gift card from our digital wallet, the ‘currency’ is converted and deducted from the total purchase amount in a single, seamless transaction.

So what does this mean in practice? Let’s say that I’m on my weekly trip to my favourite retailer. My app lets me know that the store is running a two-for-one special offer on my favourite beer. It also knows that I just so happen to have a 25% off coupon for that same beer – giving me a highly personalised offer experience. Combine this service with contactless payment through my pre-loaded debit card and you have the complete package of geolocation, personalised advertising, loyalty rewards and payments all in one neat place.

The smartphone Pay trio of Android, Apple, and Samsung have not yet captured the attention and usage of most US consumers. Shoppers simply do not have a good enough reason to pay at checkout with their phones compared with plastic. It takes integrated ordering and marketing features as shown by Starbucks (27% mobile use at checkout) and Dunkin’ Donuts to change these checkout transaction habits. Most retailers are lagging behind and will not catch up anytime soon.

Overview by Raymond Pucci, Associate Director, Research Services Advisory Service at Mercator Advisory Group

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