The fragmentation of US mobile payments

A look at how mobile payments are fragmented in the US market
By Christopher Barnard. Source: Mobile Payments Today.

From Apple Pay to Google Wallet, digital wallet providers have spent years trying to convince consumers to leave behind their leather wallets. But while stronger security and more reliable infrastructure have helped ease concerns over mobile wallets, a fragmented payments experience continues to hinder widespread adoption.

The emergence of digital wallets across many different operating systems, shopping channels, banks and technology platforms has left consumers without the consistency and convenience that would come from using one mobile wallet for anything and everything. But with all the different providers trying to get their own piece of the payment processing pie, can there really be one universal digital wallet? No, and the solution isn’t whittling down wallets to one particular provider: it’s integrating loyalty programs to create seamless earning and burning capabilities that are united throughout all loyalty programs and all mobile wallets.

Incentivize consumers

Nearly 60 percent of U.S. online adult smartphone users are interested in having access to loyalty program points and rewards within a mobile wallet. Satisfying such demand with digital wallets that enable users to earn points, track their balances and transfer points between programs will go a long way toward raising adoption rates.

For example, consumers who prefer to make traditional payments with their bank’s mobile wallet will no longer have to deal with the fact that their loyalty account only links to their favorite retailer’s mobile wallet. They’ll be able to easily earn and redeem those points with every digital wallet they use. This added layer of simplicity is especially important when considering the many different types of mobile wallets that have emerged over the past few years.

Create an easy way to burn

According to the 2015 Loyalty Report from Bond Brand Loyalty, the average consumer is an active member of more than six different loyalty programs. Finding enough room for membership cards from each of those loyalty programs in a traditional wallet can prove difficult. Pinpointing the correct card (and even remembering to pull one out in the first place) at checkout presents yet another problem.

By implementing loyalty programs across mobile wallets, retailers can improve the ease at which consumers earn and burn loyalty points. Rather than digging through a purse or wallet in search of the appropriate loyalty card, consumers can use a mobile wallet to access each of their loyalty memberships during every transaction. This increased efficiency not only promises to reduce plastic membership cards, but it also aims to improve overall engagement and loyalty among mobile wallet users.

Centralize spending

From calculating the number of points needed to reach the next membership tier to setting aside points for an upcoming vacation, tracking loyalty points from each retailer and brand helps consumers maximize loyalty rewards. By providing consumers with access to all of their points in one central location, loyalty-enabled mobile wallets will help take the guesswork out of rewards tracking. Better yet, consumers will have the opportunity to make purchases and earn loyalty points using just one mobile wallet.

When it comes to bridging the gap between different types of mobile wallets, using loyalty programs to centralize both tracking and spending is crucial. In addition to preventing hard-earned loyalty points from expiring, a consistent loyalty experience across every mobile wallet will ensure consumers earn miles and points whenever possible.

The push for digital wallets has been met with skepticism from consumers – but not only due to security and infrastructure concerns that are cited by many. Varying capabilities across digital wallets have led to an inconsistent user experience that complicates otherwise routine transactions. But by enabling consumers to earn, spend and transfer all of their loyalty points from a single location, mobile wallets can help solve the fragmentation of U.S. mobile payments and increase adoption.

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