We’ve heard the hype about mobile wallets for almost a decade. And heard it. And heard it. And yet … the road to adoption has been slow. Passenger-pigeon slow. Tin-can-and-string slow. Ugly-beige-rotary-phone slow.
The stats tell the story. The Bain/Research Now Retail Banking NPS Survey 2018 found less than one in ten Americans reported using Apple Pay that year, while a recent survey by Origin found that nearly half of consumers say there still isn’t any reason to use mobile payments.
But many experts counter that the technical and social stars are about to align and spark a rapid shift to mobile payments in the U.S.
More retailers now have NFC (near-field communication) capabilities and most new mobile devices come pre-loaded with wallets. In addition, banks and wallet issuers offer more incentives, while members of Gen Z prefer mobile payments.
Despite the lack of progress in the last decade, the financial services industry may finally be “on the tipping point of adoption,” says Kevin Grieve, managing director of financial services and payments, North American lead at Accenture.
“It’s hard to speculate what year that might happen, but when it does it’s going to happen quickly,” Grieve predicts. “The market is heading ‘mobile first’ and you need to be there. If it moves quickly and you’re not there, you’re going to be too late.”
Whether physical or digital, consumers want bank cards that offer convenience and value, says Paul Siegfried, senior vice president at TransUnion. And in this new era, being “top of wallet” transcends scaling the physical or digital wallet: It means becoming the preferred option across the entire digital space.
“You want them using your card not only in stores but also on websites, apps and all the other places by default because of your relationship,” Siegfried says. Here are a five ways banks can move their cards to the summit of consumers’ digital wallets:
1) Collaborate and cooperate
When mobile wallets finally take off, banks must collaborate and cooperate with fintech parties, Grieve says. That means cross-pollinating their reputation and trust in the customer base with a s superior technologies.
Whereas some banks piloted their own mobile wallets in the past, most now “integrate” customers through their websites and apps to the major three wallets (Apple Pay, Samsung Pay and Google Pay). Forward-looking banks also actively welcome services such as Zelle and Venmo, which let their customers send money to other consumers.
And as retailers and third-party providers roll out payment solutions, subscriptions and auto pay features, banks that don’t stay at the forefront will decline in relevance.
“You want them storing your card on Lyft, Uber, Starbucks, Walmart, all the others—and to be the default brand,” Grieve says. “And you still want to retain affinity to your brand independent of the device.”
2) Deliver value beyond the transaction
Whether in the physical or digital space, most consumers still opt for cards that offer some sort of rewards value beyond the transaction, Siegfried says.
Cash back, points and discounts still attract users. Starbucks’ highly successful mobile wallet, which now counts nearly 17 million users, offers rewards, locates stores and enables online ordering that lets consumers skip the line, pop in and grab a drink. (Its payment app is also one of the oldest around, unveiled in 2009.)
Walmart Pay’s big value prop is that it allows customers to scan items on their own and skip checkout lines. Meanwhile, many banks are aiming to put themselves in the middle with offers for certain wallets.
For instance, the Capital One cobranded credit card comes with a special intro offer of 5 percent cash back on in-store purchases when using the Walmart Pay app for the first 12 months. But the real test may rest in what banks can deliver directly to wallet users.
Apple beat many to the punch with the release of its Apple Card in August. Backed by Goldman Sachs and Mastercard, it aims to help customers create a “healthier financial life” with zero fees and information that encourages them to pay less interest. Besides its attractive incentives, the card works with the iPhone to help consumers better understand their spending. It uses machine learning and Apple Maps to label transactions and deliver weekly and monthly spending summaries.
“Many consumers focus on the value on a transaction basis,” Siegfried says. “It’s not a new thing, but they’re paying more attention to it based on the value prop that is out there.”
3) Use data to personalize
As transactions represent “just a commodity,” banks will need to use data to deliver that value, remain relevant and stay atop the wallet, Grieve says.
Banks can also work in partner programs with retailers to create personalized loyalty systems that disburse rewards based on spending habits. Offering alerts to consumers on a transaction or making other information available can further entice them to move your card to that coveted number one slot.
“You want to engage with the consumer in different ways and help them understand how they are using the card in that environment,” Siegfried says.
4) Focus on brand and trust
As many consumers still harbor reservations about mobile wallets, banks can lead the way by serving as ambassadors. Most major banks such as Bank of America, Chase and Capital One feature prominent web pages that show account users how to set up their mobile wallets.
“The key for banks and credit unions will be to ensure they offer the most compelling reasons to use their cards when provisioning a device with a payment card.” Huber says. “This includes empowering consumers with security features such as card controls to promote comfort with new tech.”
5) Reduce friction and make it easy
Finally, the most successful banks will make it as easy as possible to adopt mobile wallets, Siegfried says. While many send customers to wallets, others build P2P services such as Zelle directly into their apps. Bank of America recently made its corporate, commercial and purchasing cards compatible with the three major mobile wallets.
Another way to reduce friction comes via helping consumers locate their stored credentials and automatically update them when new cards are issued, Grieve says.
Apple gives consumers a smooth pathway to apply for the Apple card and stash it in their mobile wallets in just minutes. In this new era, the leaders will deliver convenience and value. “Think about what Apple did with the iPod,” Siegfried notes. “They didn’t invent the MP3 player, they just made it better and easier to operate and deliver content.”
And after all the ceaseless, repetitive chatter about mobile wallets, this fresh new tune must be music to anyone’s ears.
Craig Guillot is a business writer who specializes in retail and finance. His work has appeared in such publications as the Wall Street Journal, CNBC, Bankrate and Better Investing.
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