The global payments landscape is a complicated place. Technologies like digital retail wallets have made it easier than ever before for us to tap, swipe and pay. New innovations allow us to scan barcodes, add to shopping carts and receive geo-targeted updates, discounts and offers on the go.
While mobile payments continue to grow in adoption, with eMarketer predicting a $10 billion increase in mobile payments by the end of 2017 in the US and Visa Europe forecasting that 60% of the UK population is expected to use mobile payments at least once a week by 2020, the mobile retail wallet is still nascent and has experienced limited, but growing, success.
Mobile wallets enable brands to fully serve their customers with integrated value-add features combining payment and rewards. Merchants and card payment processors (banks and merchant acquirers) have realised this opportunity to offer an improved and more personalised service. By combining payment methods with sophisticated personalisation features, we can now store and use tokens of digital value such as gift cards, coupons and loyalty rewards in merchant specific apps. Meaning, if we choose to use a gift card from our digital wallet, the 'currency' is converted and deducted from the total purchase amount in a single, seamless transaction.
So what does this mean in practice? Let's say that I'm on my weekly trip to my favourite retailer. My app lets me know that the store is running a two-for-one special offer on my favourite beer. It also knows that I just so happen to have a 25% off coupon for that same beer - giving me a highly personalised offer experience. Combine this service with contactless payment through my pre-loaded debit card and you have the complete package of geolocation, personalised advertising, loyalty rewards and payments all in one neat place.
As these merchants begin to take ownership of their own payment processes, they move closer to understanding us as a consumer and what makes up our payment 'DNA' - what we buy, how we prefer to buy it and when. Ultimately, this means they can offer you relevant and ultra-personalised offers and discounts. If your mobile wallet knows how often you visit a store and what your favourite purchases are, you'll be more likely to receive a specific discount tailored to your purchase preferences. With these payments platforms powering the purchase, you could then apply that discount with the click of a button before using NFC to tap and purchase in one quick transaction.
In a landscape of ever-increasing technology and business model disruption, accelerated adoption and pull from consumers defines success. Trust, convenience, and perceived value are the ingredients that will propel mobile payments and retail wallets. Unifying various types of digital value and enabling consumers to easily buy and pay will be the tipping point to broad adoption. Essentially, if it makes our lives easier, offers a better experience and even potentially even makes goods cheaper then there is a huge market opportunity waiting to be taken advantage of.