It seems as if talk about mobile wallets is everywhere; whether it’s on the news, social media or technology conferences, and it doesn’t look like the babble will stop as more and more brands, such as Apple Pay, Google Wallet, Rogers and TD's Ugo Wallet, are jumping on the mobile wallet bandwagon. But it begs the question: do consumers care? Or better yet, will consumers adopt these technologies?
Currently, about 110 million people are using mobile payment services. That number is expected to quadruple to a whopping 515 million by 2019, an increase of 410 percent according to Juniper Research. Although 100+ million users is anything but a small feat, you need not look any further than your local Tim Hortons or grocery store to see that even with so many mobile wallets in the market, consumers still have no qualms about pulling out their credit or debit card and swiping -- or better yet, tapping -- at the cashier.
So what does this mean? If mobile wallet providers want to see a significant increase in the adoption, the benefits will have to outweigh existing payment methods, and become vastly available by retailers in order to fully replace physical wallets.
A big problem that third-party mobile wallets are experiencing at this early stage is low and fragmented merchant adoption. For example, Google Wallet payment services are only offered at “select” retailers, which leads to a very inconsistent shopping experience for consumers. Furthermore, wireless carrier co-operation is difficult to obtain as they are also in the running to compete in the wallet space, as seen through the introduction of Softcard (formerly known as ISIS), backed by AT&T, Verizon, and T-Mobile, followed with Suretap Wallet by Rogers and Mastercard. Combined, mobile wallet’s limited availability from carriers coupled with consumer uncertainty in retailer acceptance, creates little incentive for consumers to switch completely to strictly mobile payments. So what will have better traction? The answer: branded mobile wallets.
Currently, brands have the perfect recipe for mobile wallet success: a strong brand presence, control over point of sale terminal systems, an established customer base, and (in most cases) app-savvy users. Branded mobile wallets make it easy for consumers to use because it seamlessly flows through all stages of the purchase journey. From offering loyal consumers deals and discounted pre-purchase to in-store mobile payments and customer reviews, brands can leverage mobile wallets to enhance the entire shopping experience. A prime example of this is the international coffee giant, Starbucks. The integrated loyalty program is the main incentive for Starbucks consumers to use the app. Processing more than 6 million transactions per week from the Starbucks Card Mobile App, their branded mobile wallet has proved to be a trailblazer in the mobile payments industry.
As more and more brands follow Starbucks’ path, branded mobile wallets will take the reins in the coming future, placing third-party mobile wallets on the back burner.
Sep Seyedi, CEO, Plastic Mobile