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Customer Experience and Design

The Bold New World of Mobile Payments

Imagine a stressed out holiday shopper rushing to make last minute purchases in a busy suburban shopping mall. As the shopper reaches the final checkout of the day to buy the newest gaming console for her son, the total displayed on the register is over her budget.  Determined to buy the item, the shopper lifts her smartphone to use the new mobile wallet her bank introduced just last month.  With a tap on the credit card pin pad next to the register the mobile phone displays the total due and several payment options. The shopper chooses to redeem a 10% coupon on purchases received when checking in on social media app when entering the store.  Another $5.00 off statement credit is being offered by her rewards credit card, one of the 5 cards entered into the wallet  just last week.  In a flash of inspiration she decides to convert 2000 loyalty points from the retailer and 500 points from an online publisher and completes her purchase with a tap on her screen. As the receipt detailing the transaction is sent to her email and imported directly to her cloud based personal finance service, a smiling consumer rushes home after saving 45 dollars.

New Payments Reality

To some this scenario might sound far-fetched, but many of these abilities exist already in the mobile wallet space and consumers are taking notice.  In a   recent study by Jwire, 37% of consumers with smartphones have tried a mobile wallet  in the past quarter, and with offerings like Google’s  Wallet  application rolling out new features such as daily deals and location based deals the marketplace is beginning to expect these features from any payment provider that wants their payment activities.  Companies such as American Express have partnered with gaming provider Zynga to convert virtual currencies into points that can be used for purchases.  By partnering  with the popular Red Laser smartphone app  it’s now possible  for a consumer  to walk into a retailer, scan a product on a shelf and within a few taps on the consumer’s phone  buy the product  using  reward points  at a lower price elsewhere within a few clicks.

Mobile wallet apps are increasingly leveraging not only location based services to create real time offers to consumers on behalf of retailers, but also taking advantage of the intersection of online spending behaviors and traditional buying behaviors.  By offering customers the ability pay for transactions by combining loyalty points, virtual currencies from gaming and social sites and virtual coupons that are matched with consumers’ preferences, mobile wallets allow consumers to leverage their purchasing power from online and offline channels  into a convenient experience across any purchase.  Early adopters in the Mobile Wallet space  are going to great lengths to leverage this trend  and attract customers from traditional payment providers.  As these offerings become more ubiquitous, consumers will come to expect these options from any payment vendor when using a mobile wallet.

How to Compete in the New World of Payments

Payment providers will face unprecedented pressure to innovate payment options for consumers to  stay “top of Wallet” in this evolving space or risk losing market share quickly.  According to a recent study by eMarketer Mobile Payments and Person to Person transfers in the United States are expected to grow from 165 Billion dollars from 2010 to 670 Billion dollars by 2015.  Payment providers that create value added payment options that enable loyalty rewards, location based offers, points redemption, virtual currency options and blend online and offline purchasing experiences into a seamless experience for the consumer will attract and retain the highest share and ultimately the most transaction fee income.

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