Customer loyalty accelerates mobile wallet adoption
This entry was posted on Thursday, August 3rd, 2017.
Earlier this year, BusinessInsider’s Ayoub Aouad observed that retailers like Starbucks (mobile payments now account for 30% of the coffee chain’s transactions) and Dunkin’ Donuts were “winning over” consumers with their mobile wallets. Moreover, says Aouad, these retailer wallets are leading the overall mobile wallets industry due to the rapid launch of innovative features like rewards programs, coupons, mobile order-ahead and custom marketing.
“This may be surprising, considering that retailer mobile wallets can be used only at a specific retailer’s locations,” Aouad wrote. “In contrast, popular universal mobile wallets like Apple Pay and Samsung Pay can be used at multiple retailers, as long as users are using the necessary smartphones.”
According to Aoud, retailers with large addressable user bases who are loyal, repeat visitors, will see their mobile wallets continue to be popular with consumers.
“Loyalty programs will be a significant driver in retailer mobile wallet adoption. Companies like Starbucks and Dunkin’ Donuts have been able to leverage their loyalty programs to acquire mobile wallet users, which, in turn, has driven store traffic and conversion rates,” he explained. “By leveraging these programs, sales are expected to grow at a five-year compound annual growth rate of 68%.”
The importance of customer loyalty in accelerating mobile wallet adoption is also highlighted in a recent survey conducted by First Annapolis. Indeed, 15% of respondents confirmed they have a merchant payment solution, with Starbucks cited the most frequently. In addition, more than 75% of respondents indicated they receive rewards as part of mobile wallet usage. To be sure, two in five respondents would not have downloaded the app without rewards.
Although consumers are not yet ready to leave home without their physical wallet, mobile wallet payments are poised for growth. Indeed, many consumers are supplementing the Pays or an issuer wallet with individual merchant apps, although most would prefer a single payment app. It should be noted that less than one in ten (First Annapolis) respondents indicated they have an issuer wallet.
As we’ve previously discussed on Rambus Press, mobile payments provide a convenient “tap and go” frictionless commerce experience that effectively eliminates checkout lines at stores and long queues at bus and train stations. However, mass adoption of mobile payments will only be achieved when there is a single, unified platform built on an economy of digital trust that ensures an uninterrupted physical to digital experience. As such, mobile wallets must provide more than a convenient place to store virtual cards by integrating loyalty programs, gift cards, receipts and payment history in a single app. In addition, consumers require assurances that their mobile payment information will remain secure. Similarly, stores and financial institutions need to be confident that the technology behind mobile payments is secure and easy-to-use before it can be truly embraced.
Interested in learning more about mobile payments and wallets? You can check out our product page here and our eBook on the subject below.