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BizReport : Loyalty Marketing : April 15, 2016

Expert: How loyalty will help mobile wallets

Mobile wallets have been getting a lot of attention from businesses around the world, but according to one expert the real benefit to mobile wallets won't be seen until loyalty is introduced.

by Kristina Knight

Kristina: Mobile wallets have shown strong adoption over the past two years. Do you expect their growth rate to continue?

Justin Benson, CEO, Spreedly: They key criteria is more around mobile wallet usage vs mobile wallet adoption. In general, the actual usage of mobile wallets has been disappointing. Generally there are two kinds of people when it comes to making payments. Those that pay little to no attention to payments; they own one or two credit cards and simply swipe and pay. The other group is very focused on optimizing payments; they'll accept brand related credit cards if there's decent rewards, shop for coupons, sign up for programs etc. If you look at Starbucks - the most successful mobile wallet by a retailer - there was significant room for payment improvements and loyalty has always been key. Speed up the time it takes to get your morning coffee and make sure you keep getting your offers and coupons. These dual dynamics don't exist for all retailers but when they do, as is the case for starbucks, mobile wallet adoption is strong.

Kristina: What is driving the interest in mobile wallets?

Justin: The invention of mobile OS related wallets (apple pay) didn't appeal to the first group because, as stated, very little appeals to this group. Payments isn't broken (although the introduction of EMV in the US was seen as an opportunity for changed behavior) For the second group, the group that is open to trying new payment approaches, mobile OS wallets was a step backwards - they lost access to many of their beloved programs! So you ended up with a very small slice of consumers - usually technologists enamored with trying new technology - trying out mobile wallets.

Kristina: You've said mobile wallets need loyalty programs to thrive - why is that?

Justin: With adoption of OS related mobile payment methods struggling, brands and retailers should look at trying to find the Starbucks perfect storm if they're focused on their own mobile wallets. Are there times of the day/week/year where checkout time is a real pain and a mobile wallet prepay and pickup could work? Or is there an element of their sale that works well with loyalty/rewards/coupons? One example is the weekend at outlet malls. Those tend to be price conscious/bargain/coupon shoppers who face long lines to checkout. Is that a mobile wallet opportunity?

Kristina: What should brands/retailers look for in a mobile wallet loyalty program?

Justin: Mobile wallets are online sales and therefore follow an e-commerce payment infrastructure, not the instore POS system. Retailers will have to ensure that they have the same type of loyalty infrastructure in place for ecommerce transactions as they do for POS. At Spreedly, we see that as a challenge for some retailers as they are using different payment providers for online vs POS.

Tags: ecommerce, loyalty marketing, M:Commerce, mobile marketing, mobile wallets, Spreedly

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