mobilepaymentstoday.com
The conversation around mobile payments has grown undoubtedly louder.
Along with the wide-eyed optimism and excitement around mobile payments, there is also a healthy does of skepticism. Some speculate that adoption will come down to whether or not stores can support mobile payments (i.e. upgrading POS systems to terminals that are NFC chip compatible to accommodate mobile payment solutions). Others have pointed to security and privacy concerns, or the fact that while cash may be a dying breed, the reason mobile payments won’t take off is because consumers still genuinely like to have a physical plastic credit card in hand.
It’s the payment industry’s chicken-or-the-egg conundrum: which comes first, mobile payments or loyalty? This is where I’d argue that mobile loyalty clearly comes first. Mobile loyalty is the onramp to mobile payments, not the other way around. Consumer loyalty will directly impact consumer adoption of mobile payments. The success of mobile payments adoption will ultimately come down to consumers and merchants alike asking themselves this question: what is the tangible value proposition? What will I gain from adopting mobile payments and how will this solve for a need?
Sure, mobile payment is convenient, but is convenience enough to keep customers coming back to the app on a regular basis? There needs to be an established reason to keep using the app, an additional value. One good reason is customer loyalty programs. If you take a step back and look at mobile payments apps, the ones that have proven most successful involve loyalty and rewards features (i.e. – the Starbucks mobile app). Brands need to implement a strategic reward structure in order to drive customer engagement and brand loyalty. Once customers have earned rewards, the app should integrate a payments function in order to complete the circle and transact the purchase.
For example, say that I frequent the coffee shop around the corner from my office. I find out that they have a mobile loyalty app and are offering 5 loyalty points for signing up, so I decide to download it and check it out. I learn that as I spend more, I gain more points which results in free lattes, and, as an added bonus, I get a special discount on my birthday. However, a new coffee shop opened up just a little closer to my office in a more convenient direction. When grabbing a cup of coffee on the go in the morning, convenience would tell me to go to the coffee shop that is just a little bit closer, while the other’s loyalty program would incentivize me to walk a little bit further. I’m willing to bypass convenience because I can earn points equating to personalized value to me and because I associate the coffee shop with a positive experience. Value will trump convenience.
If the coffee shop’s app simply gave me a simplified way to pay, with no additional value, there would be no reason for me to continue to frequent that particular location. However, now that I’ve become accustomed to accruing points, redeeming offers, and paying for my coffee order all at one time, the mobile payments portion becomes all the more important to provide the seamless and quick shopping experience I enjoy.
What both the mobile payments industry and consumers need is a mobile engagement strategy that looks beyond mobile payments services and integrates loyalty features such as earning points, rewards, and access to offers and deals. This is what consumers will find most valuable and an effective incentive to return. Mobile payments then become the metaphorical, but necessary, cherry on the top of a convenient and rewarding shopping experience. These loyalty-driven interactions will be what ultimately drive mobile payments adoption.
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