Mobile wallet launches by issuers, “The Pays” (Apple Pay, Android Pay, Samsung Pay), telcos and retailers have become increasingly commonplace – if not fashionable – in recent years.
But most have limited their market opportunity by failing to evolve beyond being credit card substitutes. Wallet providers are in a position to deliver a measurably superior consumer experience to cash and cards, but to do so, they must begin to operate as customer-engagement platforms.
As discussed earlier, nearly 2.5x as many respondents to our survey have used mobile coupons and rewards programs as NFC wallets, underscoring the role that integrating these types of services can play in driving wallet adoption.
Value-added services have a major role to play in driving habituation and frequency of use, which is particularly important when considering that only 2% of respondents are using NFC wallets daily, period. Figure 5 shows the dormant opportunity for wallets to take their engagement strategies one step further with data integration.
Nearly half of respondents agree they would like to receive personalised information based on immediate location, and another 46% would share personal information with a retailer or brand for better rewards.
By incorporating geolocation, transactional and behavioural data, among other inputs, wallet providers are in an ideal position to deliver personalised and contextually relevant commerce experiences for their users. Inevitably, we believe the wallet providers that facilitate this value exchange most effectively will win on the basis of mind-share and adoption.
Although the insertion of value-added services and data inputs into mobile wallets remains nascent, we believe it will become a growing focal point as 2017 progresses. Moving beyond the payment is the next frontier for wallet providers to conquer, and it will be critical to ensuring buy-in from merchants and consumers alike.
The rise of the digital merchant
Merchants have seen the rise of internet-enabled devices bring a new set of competitors, evolving consumer behaviours and elevated shopper expectations. As shown in Figure 6, the majority of merchants have chosen to be part of this evolution rather than watch it unfold from the sidelines.
Merchants are currently embracing or planning deployment of a wide range of digital technologies within the next year. The implementation of an e-commerce website is, unsurprisingly, the most widely adopted digital strategy, with 62% of merchant respondents having already deployed one, and more than one in five planning on implementing an e-commerce website within the next 6-12 months.
As part of merchants’ e-commerce strategies, card-on-file billing has become a popular approach to streamlining shoppers’ checkout experience and, plausibly, increasing conversion rates; 57% of respondents have implemented card-on-file billing, and more than one-third are planning or considering deploying.
As shoppers’ demands for a more frictionless commerce experience continue to grow, we believe the importance of card-onfile billing in merchants’ online and offline mobile commerce strategies cannot be overstated.
Many of the early advancements in merchants’ digital strategies were understandably focused on online selling. But with smartphones now emerging as a linchpin between the virtual and physical worlds, a noted focus on mobile in-store strategies has become apparent.
According to our survey, 46% of respondents now offer mobile coupons, and 44% have mobilized their loyalty/rewards programs. In many instances, merchants have integrated these assets with their mobile apps, technically reclassifying them as mobile wallets, although without payment capabilities. Our survey results show that merchants are working to convert their apps into omni-channel commerce platforms.
Of the 45% of merchants that have implemented a branded, customer-facing mobile app, 86% of those allow shoppers to purchase goods and services from within the app. We also found that two in five merchants have now deployed a branded, customer facing mobile wallet (not necessarily with in-store payment capability), and another 46% are planning or considering implementation.
The rise of merchant-branded wallets is occurring simultaneously with growing acceptance of NFC-based wallets; more than half of respondents claim to have enabled NFC compatibility at the POS, though anecdotally, few have begun to widely promote acceptance. We believe merchant-branded wallets can and should coexist with “The Pays.” But both types of wallets must continue to evolve to prove their unique value to consumers.
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