Loyalty Reinvented: How Mobile Payments Can Thrive

03 March 2013

Loyalty, which helps drive consumer behavior when it comes to payment choice, will be equally important in mobile commerce. But it will need to be reinvented to accommodate the change in technology, according to a new report.

In the report, Euromonitor International notes that mobile wallets have yet to take off for various reasons, including consumer fears over privacy and security, an uninformed consumer base, the absence of the needed infrastructure, and an inability to show improved convenience over traditional card-based payments. As such, mobile payments will have to provide something better.

”Ultimately, mobile payments must be as cheap, safe and easy to use as traditional payment methods to even be considered a viable option because consumers will choose the method of payment that provides the greatest value,” author and analyst Michelle Evans notes in the report. “In order to encourage wider adoption and ensure wide usage, mobile-payments players will have to provide a value add, which could come in many forms, including monetary savings, improved security, ease of use, or increased loyalty.”

Early Successes

The integration of value-added services already is showing to be necessary for mobile wallets to thrive, as illustrated by the success of the Starbucks mobile app, which uses a QR code to transfer payment and loyalty points at the time of the transaction. And though still very early since Isis’ recent launch, participation in the telco-based wallet has shown to be highest when attached to loyalty programs, according to the report.

And while loyalty is important to helping mobile use grow as a payments option, loyalty, as we know it, is in need of reinvention, Evans wrote. “Thanks to the increased availability of smartphones, the rise in location-based technologies and the emergence of big data, it is now feasible for companies to deliver a more personalized loyalty offering than has been possible and to do so in real time,” she noted. “Ultimately, mobile payments will be as much about the exchange of payments as it is the consumer relationship around the payment transaction.”

Be ‘Customer-centric’

Evans suggests in her report the importance for payments providers to develop customer-centric offerings that promote loyalty, retention and ultimately payment spend, especially in mobile payments.

“It’s now more important than ever for companies to set themselves apart from competitors,” Evans wrote. “To do so, companies need to have a solid grasp of where the industry is headed.”