Why A Mobile Wallet Presence Is Key to Retail Growth


The past five years have seen mobile payments launch in fits and starts in the United States, leaving many to ask what it will take for mobile wallets to reach higher consumer adoption and become the go-to payment source.

Before you write off the emerging technology, consider this: Forrester calculates that 36 percent of the urban online U.S. population is actively using or is interested in mobile wallet features, which range from coupon redemption, to loyalty cards and promotional passes. Digital wallets are finally gaining traction among consumers, and retailers are responding by investing in mobile marketing strategies complete with mobile wallet initiatives.

To clarify, there are two functional pillars of mobile wallet: storing and utilizing payment data for mobile transactions, and marketing functionality tied to non-payment data like coupons, loyalty cards, tickets, and promotional content. Each function serves as a digital touchpoint driving convenience for consumers, and both are helping to increase adoption and usage of mobile wallet apps overall. Keep in mind that while the mobile payment industry hasn’t always met expectations, Forrester has reported a promising surge around the world and estimates that mobile payment transactions in the United States alone will grow 20 percent each year through 2021, reaching $282.9 billion annually.

Now, as popularity of the non-payment side of wallet continues to grow — particularly among users who desire more personal, convenient and omnichannel brand experiences ― retailers are finding broad benefits tied to the vast range of features that the technology can provide.

So why should brands offer mobile wallet content to their customers?

Brand loyalty has been significantly enhanced by mobile wallet enablement. Retailers are benefiting from loyalty cards being more accessible in the mobile wallet, as compared with hoping their physical card makes it into a person’s leather wallet. Also, brand awareness and recall are aided when consumers add a loyalty card into their mobile wallet because it is viewed each time they pay with their phone or access another loyalty card.

Loyalty enrollment is on the rise as well with seamless user experiences such as automatic loyalty enrollment (ALE) at the point of sale. Mobile marketers have noticed the steep increase in loyalty program membership and use this loyalty enrollment as a foundation for personalized communication, such as tailored mobile messages, to bolster redemption success and keep customers coming back. Shoppers are also getting what they want: a mobile-first brand experience that allows them to amass and redeem coupons, special offers and loyalty points with ease on their phones. Giving the option to complete their purchase using Apple Pay or Google Pay offers an additional element of convenience, all together enhancing their mobile wallet-enabled brand experience.

Combined, these payment and non-payment functions make mobile wallet a goldmine for retailers who can use its features to build incredibly personalized, branded experiences for customers, while also enabling convenience and avoiding app-fatigue. Retailers and brands can connect with their customers without relying on them to download an app. Mobile wallet, as well as Push and SMS messaging, is driving incredible brand experiences and high engagement rates outside of the app.

Innovative brands, such as Polo Ralph Lauren, are using Apple Wallet and Google Pay to drive sales and revenue, and are seeing an average 65 percent conversion rate on offers issued as a result. In fact, 70 percent of consumers perceive brands more positively because they offer digitized loyalty cards, such as those stored and managed through a mobile wallet. Eighty-three percent have a more positive view of a brand that delivers personalized loyalty messaging, such as points and rewards.

There really is no limit to the capacity of mobile wallets. In China for example, 51 percent of Chinese metro mobile phone users utilize a payment app such as WeChat or Alipay (according to Forrester). If the global success of mobile wallet is any indicator, the U.S. market may soon be introduced to additional functionality and features aimed at accelerating customer engagement before, during and after a purchase. Soon, the focus for retailers will be less about competing to extend greater rewards in exchange for lasting loyalty. It will be more about morphing mobile wallets into a rich customer engagement channel.

With the right approach, a brand can attract and retain loyal customers based on more than rewards alone. A study by Bond Brand Loyalty found that 57 percent of consumers are interested in using their mobile device to check their points balances and redeem reward points, and 73 percent of adults are more likely to join a loyalty program if points and rewards are automatically updated and immediately visible. Using mobile wallet to power a loyalty program enables a retailer to meet both of these customer preferences right out of the gate.

We are training consumers to adopt mobile wallet for all of their needs. Although Forrester has revealed that consumers today remain more worried about dropping their wallet (60 percent) than their smartphone (40 percent), the idea of using your smartphone to pay for everything from groceries to train rides is still highly appealing. Consumers are growing closer and closer to feeling comfortable leaving their wallets at home — a scenario the industry has been idealizing since 2014 or before — and the non-payment side of wallet is going to make that vision a reality.

Jack Philbin is co-founder and CEO of Vibes. With more than 15 years in mobile, Jack is one of the industry’s premier thought leaders. In addition to his role as CEO of Vibes, Jack serves as Chairman of the Mobile Marketing Association’s North America Board of Directors and Vice Chairman of the MMA’s Global Board of Directors. He has been a member of the CTIA Wireless Innovation Council since 2006 and is a regular speaker on mobile innovation.

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