Unfolding the mobile wallet with three key ways by Phaedra Hise, Colloquy.
We all love the idea of making purchases and engaging with loyalty programs via smartphone. Sadly, imagination is still far out-hyping the reality, as technology companies hawk a wide variety of solutions that befuddle consumers and merchants alike. Marketers may want to hold this technology at arm’s length for a little longer, until the best options become more obvious.
The vision for the mobile wallet concept is that retailers can communicate with customers before, during and after the sale, including letting shoppers tap their phones on point-of-sale (POS) devices for instant transactions and delivery of special offers. Ultimately, every wallet developer seems to share the goal of managing both payments and loyalty data in one handy app.
It remains to be seen whether the winning platform will be merchant-specific (like the Starbucks app); partnered with several merchants (like Google Wallet); merchant-agnostic and instead partnered with card issuers (like the ISIS platform); or some combination of the three.
If your company is already involved in a mobile wallet project, the following questions will inform your pilot program. If you still aren’t sure that the time is right, these issues are the ones to analyze as you make up your mind.
Do you pay for your own app or play in someone else’s? Some platforms are proprietary. The mobile wallet capability would be embedded in merchant applications, and branded to that particular merchant. In contrast, Google and ISIS offer a third-party wallet that merchants can play in. Proponents of this approach point out that customers aren’t likely to install an app for every store brand that they regularly visit.
Will data become the new interchange? Data is one of the mobile wallet battlegrounds, and both developers and merchants are lining up on either side of a defining line—on one side are the traditional interchange fees, and on the other is data for sale.
Merchant Customer Exchange, or MCX, is a wallet developer that is owned by a powerful cadre of high-level retailers, including Target, Walmart, Best Buy, Shell and Lowe’s—none of which are yet willing to talk directly about their wallet initiatives because they are still under development. The attraction of MCX is that its wallet will protect merchant data, which will be shared only if merchants agree to it.
At the other end of the data-control spectrum, Google has announced that Google Wallet will not charge interchange fees to merchants, and industry watchers speculate that the company plans to generate revenue instead from customer data reports. Although the absence of interchange fees appeals to merchants, the “data sale” model may limit merchant participation for those who would prefer to protect their data.
How will mobile wallet work if you have an existing loyalty program?
Companies with a value proposition compelling enough to entice customers to use their own app-based wallet can fully integrate the wallet into their loyalty program and decide what data is gathered and how it is used. But for someone playing in a larger wallet, those terms must be negotiated.
What’s exciting for small-to-midsize retailers is that mobile wallet may allow them to play the loyalty game, too. Just like a credit card, a mobile wallet must work for a wide variety of smaller and midsize merchants, or else it won’t become universally adopted. Smaller merchants may start out using the wallet just for payments, but could then begin to take advantage of the wallet’s ability to capture and deliver information to their best customers.
Three steps to build your mobile wallet strategy
There are three ways to test, integrate and begin building mobile wallet tactics into your existing loyalty strategy:
There’s little to gain by simply being first with mobile wallet, but there’s a clear benefit in testing a handful of mobile options that appeal to your most-valuable and your high-potential customers.
Marketers should thoroughly understand the shopping experience that they want to deliver for customers, and figure out the role that a mobile wallet plays in that. If embedding payment capabilities in your loyalty app or joining an online wallet platform makes shopping easy for priority customers, the solution will pay off.
A mobile wallet should be part of a robust mobile strategy. It shouldn’t be the strategy. What is your existing mobile strategy, and how do the different mobile wallet platforms integrate with that strategy? Because there likely won’t be one single mobile wallet winner, don’t feel that you must either choose the right one or not choose at all.
If you decide to experiment, then set rewards for key participation goals, and deliver solid benefits for customers engaging with you in this new platform. For example, reward for accepting push notifications, signing up for mobile coupons, and registering a favorite store. Integrate mobile with your existing strategy by using program currency to drive these sticky behaviors.
Although the name “mobile wallet” suggests that payments are the driver, the true value of the mobile wallet is its potential to completely change the shopping experience, and to enrich relationships between retailers and their customers.
Phaedra Hise is Senior Editor at COLLOQUY, a LoyaltyOne research group.
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