I recently attended Wallet Wars, the annual event to “produce the ultimate mobile wallet,” in New York City. The atmosphere was extremely exciting, as parties from all around the world that work in the payments industry congregated to share their thoughts on its future direction.
Here are three insights that stood out at Wallet Wars:
1. Collaboration and the Ecosystem
A huge barrier to collaboration is the nature and structure that the mobile network operators (MNOs), retailers, and financial institutions should adopt in order to make mobile payments happen. It’s clear that a single entity can’t lead the entire collaboration, so how will this type of partnership work? The structure of this evolving ecosystem will be essential to determining how the collaboration will operate.
A big reason for the free-for-all in the mPayments space is rallied around the conversation of who owns the customer. Retailers feel that the customer is theirs to own, both in data and conversions, while the financial institutions feel that the customers are theirs from a payments perspective. This has led to a stalemate in the industry and the slow movement forward. It is from these disputes that collaborations are formed by various players in the payments industry such as MCX (collaboration of major retailers in the US) and ISIS (collaboration of MNOs).
These collaborations were all the buzz at the event, specifically around MCX. Customer adoption of mobile payment products will dictate who owns the space, which is what makes MCX such an ominous entity to financial institutions scared of being given the backseat. With such a strong collaboration amongst retailers, a clear signal was given to financial institutions that merchants are willing to step up to the plate and take over the payments space for the data, if for nothing else.
2. QR Codes are a Temporary Solution
An NFC payment model is the way to go. NFC makes for a secure, fast, and user-friendly payment system. QR code scans are being used currently right now, strictly by retailers – they are not considered by financial institutions, remaining a temporary solution due to their lack of reliability and security.
The ecosystem to implement NFC has been implemented internationally: Japan did it a decade ago, and Canada has recently started. Anytime you use a credit card’s tap payment feature, you’re experiencing the NFC infrastructure that Canada has laid down. However, the US is still a few years out due to a larger number of players and the lack of infrastructure ubiquity.The challenge of transitioning QR codes to NFC remains: only a few phones have NFC enabled on the device. Apple has no NFC-enabled devices. There is no NFC standard.
3. How Will the Mobile Wallet Enhance the Shopping Experience?
It’s high time we went beyond payments in with the mobile wallet. It’s fine and dandy that companies can make an app, but now we need to move to the next step: how does this app elevate the consumer experience? A major opportunity lies in loyalty programs. For example, customers are receiving points, redemptions, and savings from all these cards. In order to drive mobile payments and the mobile wallet, companies will need to offer cost savings or inherent value that customers will feel, but won’t necessarily see.
Companies can also make a play to expedite adoption through incentives; if customers choose to pay with mPayments, they save a certain percentage off their bill. The opportunities are not just with loyalty programs – mobile devices present opportunities to engage the customer through location-based marketing (such as through coupons or limited offers).
An excellent example of having loyalty integrated into mobile payments is the Starbucks app; essentially, customers can load money onto their profile and pay for their purchases through the app. The kiosk scans the app’s QR code and the transaction is made. Every time a transaction is made, the app automatically dispenses a point to the customer, which can be redeemed for free Starbucks beverages.
Also, much like how YouTube did not kill Hollywood, mobile payments will not overrun cash or credit; instead, they will serve as a new medium to make transactions and enhance the consumer experience.
All in all, I came away from Wallet Wars with a sense of excitement about the many exciting innovations that are in store. I look forward to seeing Xtreme Labs continue down the path of being a game-changer in this rapidly evolving industry.
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