North American Bancard Blog

Mobile Wallets Go Beyond Payments

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mobile payments

There has been a lot of talk about mobile wallets and the convenience and security they bring to the consumer shopping experience. The premise is simple – a mobile wallet is essentially an app on your smartphone (Apple Pay, Android Pay or Samsung Pay) into which you load credit card account information; then when you shop, instead of using your credit card, you activate the app, tap your phone on the payment terminal and the sale is complete. Transactions such as these are generally considered to be more secure than regular payment card transactions because they usually require a PIN number or fingerprint authentication in order to activate the app on the smartphone.

But mobile wallets aren’t just about payments. In fact, some experts believe the biggest advantage of mobile wallets may not have anything to do with payments, and it could be a bigger market than anyone thought it would be. This non-payment market includes things like storing loyalty cards and allowing users to access them right from their phones, tracking and calculating points and alerting the user to when a bonus or benefit level has been reached.

Starbucks has long been held up as the gold standard in non-payment payment app features, giving the app more value to it than just providing consumers with another way to pay for their lattes. The app’s My Starbucks Rewards loyalty program not only allows customers to customize their purchases and monitor the progress in real time, it also provides Starbucks with a way to track consumer buying behavior. The app also allows customers to pay for their purchases in advance and schedule pick-ups in store, so they don’t have to wait in a line. Given that the average smartphone user will only use about three payment apps in general, a payment app that does more than just payments increases the likelihood that the consumer will use it more often. And the more non-payment options that are added, the higher the app value is for the consumer, particularly when it is designed not just to acquire and retain customers, but to serve them better, as well.

A report from Forrester Research states that mobile wallets are poised to become “rich marketing platforms” within five years, and that forward-thinking marketers should be testing campaigns now to ensure they are ready for the future. “The key takeaway for brands is that they should not see mobile wallets as a payment topic,” said Thomas Husson, vice president and principal analyst at Forrester Research. “They need to add value before, during and after the transaction by delivering services in the mobile moments of their customers. It means mobilizing their loyalty programs and branded content and contextualizing offerings for real-time. Mobile wallets will increasingly become a marketing channel.”

According to a report from Urban Airship, the ability to store and retrieve loyalty cards is essential to mobile payment apps. The report states that the non-payment part of mobile wallets could actually increase mobile payments. “Our survey of 2,000 smartphone users offers massive evidence to suggest that the adoption rate of mobile payments depends on what else is in your wallet,” Judy Chan, senior product marketing manager at ‎Urban Airship, said. “While a slight majority of respondents are interested in using mobile payments (23 percent having already used them), nearly three-quarters of consumers will use mobile payments if loyalty rewards and offers are automatically applied.”

The key in all of this is what Chan terms “automatic application” of loyalty awards. “When paying with your phone means never forgetting a coupon, missing out on rewards, or fumbling at the register, it provides consumers with a compelling reason to go all-in on mobile payments,” Chan continued.

In today’s mobile world, mobile payment apps can no longer be thought of simply as a payment tool. Customers want as much information as possible at their fingertips, and mobile payments are moving in that direction. Even today mobile payment apps are kind of like an iceberg, in that there is a lot more to them than what you see at the surface, and anyone who thinks mobile payments are just some cool new convenient way to pay for goods and services is missing out. And soon, our mobile payment apps could go beyond payments and loyalty programs – it may come to a point where we choose our mobile payment apps by which ones are offering the best non-payment services.