TPN Insights

US and UK Mobile Wallet: A shopping companion

Mobile wallets, the technology inside mobile devices that includes payment software (e.g., Apple Pay, Google Wallet, PayPal and, coming soon, Samsung Pay), have realized a slow yet gradual adoption, but they present huge potential for brands and retailers.

In the U.S., while mobile payments accounted for only $52 billion in 2014, that’s expected to hit $142 billion by 2019.

In the U.K. mobile payments are projected to hit over £1.2 billion a week by 2020. With over 1 in 3 estimated to spend over £50 a week by this same time.

In addition to being able to pay with your phone, mobile wallet allows consumers to store loyalty cards, receive targeted offers and read branded content. Increasingly, we are seeing mobile wallets function as much more than just payments as brands add value before, during and after the transaction.

What’s the value for shoppers?

Convenience. Mobile is becoming the primary device that consumers use for both consuming content and navigating the physical world. In turn, mobile wallets eliminate the need for paper coupons, organize bulky items such as loyalty cards, and expedite the checkout process. Kohl’s encourages their Yes2You rewards members to scan and store Kohl’s Cash in their savings wallet to redeem at checkout. The simplified experience reduces friction and makes it more seamless to get shoppers through the journey quicker.

Content that is relevant. As brands understand more about their shoppers from purchase behavior or the things they’ve consumed in terms of media, they can deliver ads and offers relevant to them directly into a mobile wallet. Starbucks is a best-in-class example that integrates loyalty, gift cards, product information, real-time insights and branded content via mobile. Payments fade into the background to yield to a meaningful mobile engagement platform.

Local discovery. Google search interest in “near me” has increased 34x since 2011 and nearly doubled since last year.2 Mobile wallets have potential to tie real-time location and proximity to either trigger an offer or remind a shopper when they are near a store. For example, if one were to search on their Apple Watch for “shoe store near me,” a national chain could display its location information in search results and offer an in-store coupon via Apple Passbook. By turning “near me” moments of local search into “in store” moments of purchase, consumers can discover new shopping experiences

What’s the advantage for retailers?

Proximity to payment. Mobile wallets allow for more relevant offers specifically targeted to a buyer in a mindset to make a purchase. UK supermarket Waitrose is trialing a loyalty scheme called “Pick Your Own Offers” which invites My Waitrose cardholders to select their top 10 items that will then be discounted by 20% every time they are purchased. Mobile wallet aims to leverage existing programs and create additional ways to reward shoppers in-store through their mobile device.
A deeper level of customer data. Another advantage of mobile wallets is the deeper level of customer data and instant feedback loop they can provide for campaigns and programs. Context will be key to keeping consumers engaged, and better analytics from mobile wallets will be one element to help inform how to provide that context.

What’s the opportunity for brands?

Communication with loyal customers. Brand-specifc mobile wallets are usually tied in with loyalty programs to incentivize and encourage habitual usage with offers and rewards. But as a result of an agreement between the JICC (Joint Industry Coupon Committee) and retailers, no brand can independently create an offer and distribute it through mobile without a tie-in to a specific retailer’s POS system. For brands, this presents an opportunity to focus on mobile wallet as a CRM tool to deepen customer relationships.

The future of mobile wallets

According to a recent Gallup study, only 13% of U.S. adults have a digital wallet app on their smartphone. When asked what the primary barriers to adoption were, 55% cited security concerns, 21% mentioned that they just didn’t know enough about it, and 14% didn’t see any benefit.3 Paying with your phone requires a tremendous shift in behavior for both merchants and customers, and the industry is still evolving to overcome these barriers. But with this behavior change on the cusp, according to new research from Visa Europe, consumer adoption of mobile payments will grow faster than ever in the coming years. 6 in 10 Britons expecting to use their mobile device for payments at least once a week by 2020.

Offers, coupons and loyalty programs are nothing new to marketers seeking to engage with target audiences and drive demand. But by connecting these tactics to mobile wallets, they’re starting to provide more convenience and context to consumers while they shop, as well as providing real-time insights that marketers can harness immediately to improve performance or meet specific objectives. Nearly 47% of people interviewed for the mobile money report are interested in using their smartphone to make everyday contact last payments in a shop.

After all, consumers want better shopping experiences, not better payment systems.

Mobile Wallet Highlights

Vibes // Vibes is a global mobile marketing vendor whose Catapult mobile relationship platform is designed to allow marketers to deliver the various kinds of mobile marketing messages – text, push notifications, Apple Passbook, Google Wallet, mobile web campaigns – in a consistent way. Since 1998, Vibes has powered over 5 billion mobile experiences for companies such as Sears, Home Depot, The Gap and Honda.
Zapp // UK mobile payments start-up Zapp will launch their new service in Fall 2015. It works via an integration with existing mobile banking apps and will be supported by five UK banks at launch — HSBC, First Direct, Nationwide, Santander – which are also signed up to offer Apple Pay to their customers – and Metro Bank. Their mobile payment app lets consumers pay for goods and services in real time with their smartphones and allows users to see their bank account balance before paying for anything which, critically, removes the need to store card details online. After payment, the user’s account balance is updated instantly.
Paydiant // US-based Paydiant was bought by PayPal earlier this year. Its white-label platform is used by Subway, Capital One, and merchant-owned network MCX (led by Walmart, and whose members include Target, CVS, Rite Aid, Best Buy and others), allowing them to add mobile payment, loyalty and digital-coupon capabilities into their own apps. It’s up to each retailer to choose which services they want to offer and how they want those services to work, enabling the features either through NFC or QR codes. The idea is that each retailer can build whatever makes the most sense for their customers.
(1) “Mobile payments could make shoppers spend more,” CNBC , April 2015 (2) “I-Want-to-Go Moments: From Search to Store,” Google Think, April 2015 (3) “No One Is Winning the Battle for Digital Wallet Customers,” Gallup, July 2015

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Ruth Stainton
Ruth Stainton
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