In Search Of A Use Case For Mobile Wallets

What's Next In Payments®
1:28 PM EDT June 12th, 2013

Using a mobile wallet at the point of sale may be easier and safer than paying with cash, but right now, it has few advantages over paying with plastic.

That means that in some ways, mobile and digital wallets are a technology in search of a use case, which helps to explain why mPayments account for just 0.001 percent of total retail purchase volume.

It’s the mobile wallet industry’s dirty little secret, but one Dominic Hofer, CEO of Loylogic, is not afraid to point out in his latest white paper, “Why Loyalty Payment Can Help Digital Wallets To Break Through.”

Hofer’s argument is simple but strong, and it’s one we’ve heard before: the act of being able to pay with your phone is not enough to drive change to the payments ecosystem. It doesn’t provide enough incentive for consumers to change their behavior, merchants to change their POS systems or handset manufacturers to alter their devices.

But in his paper, Hofer claims that Loylogic has found the missing ingredient that can ignite mPayments adoption and provide incentive: loyalty points redemption.

“Loyalty points redemption at the point-of-sale may just be the preferred mechanism for strengthening loyalty by giving members the value they desire, the redemption choice they seek, and the flexibility they need,” Hoyer wrote. “And, at the same time, it provides for that strong use case that digital wallets need in order break through user adoption: consumer can pay with new money and merchants get access to new money.”

To support that argument, Hofer cited a recent study by Loylogic that found that consumers judged the ability to use their points and miles anywhere and at any time was their most important redemption factor.

In fact, this flexibility was so important that 60 percent of users were willing to accept lesser value from their points if it meant they could redeem said points more easily.

Since Loylogic’s PointsPay platform allows for widespread redemption, Hofer argues that it could be the missing piece of the mWallet puzzle.

To learn more about Hofer’s take on mWallet ignition, read the full white paper here.

And to learn more about how loyalty is going to impact the mWallet wars, sign up for Loylogic’s webinar on July 11.

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