The Rise of Mobile Wallets —and What Marketers Need to Know

The early adopters of Apple Pay in 2016 included KFC, Starbucks, Chili’s, ExxonMobil, Kohl’s, and J.C. Penney. Some retailers—most notably Starbucks and Dunkin’ Donuts—soon provided their own mobile payment solutions through their apps. Among the major players in that space, the Starbucks app “is a gold standard for providing a payment and loyalty solution that solves a core customer pain point—standing in line,” Tarleton says. “In addition to saving time, it also saves customers money with centrally managed, stored rewards.”

Kohl’s Pay, Tarleton says, is “another good example of a digital payment solution that simplifies shopping for customers by integrating rewards in one place.” Kohl’s Pay also allows quick purchase at the register for those who have the retailer’s private-label credit card linked. This practice “creates a loyalty ecosystem that also provides insights on shopping habits to the retailer that they can use to engage their users and build loyalty,” she says.

These types of apps facilitate transactions that tend to happen near or within a store, according to Miller. Starbucks and Dunkin’ Donuts in particular have delivered “tremendous uplift in streamlining the checkout experience overall,” he says, particularly with their mobile order-ahead capabilities. The mobile order-ahead feature shifts transactions that would ordinarily take place within a store to outside the store, allowing customers to bypass the line when they arrive. This experience delivers not only the convenience of avoiding the wait but also a VIP feeling for the customer, Miller notes. “There’s some emotion, some loyalty tied to that overall experience,” he explains.

One of the oldest mobile payment solutions is PayPal. The company, founded in 1998, had a big head start on virtually all of its competitors, giving it much more time to integrate with e-commerce sites, mobile sites, and within apps, according to Miller. PayPal also has been particularly successful with its partnerships, he notes, which has helped it gain usage.

“PayPal is taking the adage of being everywhere the consumer is, everywhere the consumer is buying,” Miller says. “They’ve partnered with the Facebooks of the world.” PayPal has also followed a consistent approach to going after enterprise retailers and making sure that the PayPal button appears on every retail e-commerce site or mobile app. Moreover, after Braintree acquired Venmo in 2012, PayPal responded by acquiring Braintree in 2013.

THE MOBILE WALLET EVOLVES

Experts expect mobile payment solutions to evolve beyond simply serving as vehicles for card payments. According to Tarleton, the mobile wallet is “the next step in the mobile device becoming the consumer’s central nervous system.” Eventually, mobile wallets will “replace the entire billfold or purse,” she adds.

Yale Vinson, technical product manager at Blackhawk Network, a provider of gift card, digital payment, and loyalty point solutions, agrees. “The industry has been missing the mark by focusing primarily on payments instead of a more complete solution that includes elements like gift cards and loyalty points,” he asserts.

Mobile wallets need to provide added value for consumers, and forward-thinking companies can focus on “moving beyond the payments utility of mobile wallets to consider the overall commerce experience,” Vinson says.

Although he notes that Apple Pay’s efforts have been paving the way for a more seamless mobile payment experience, Miller agrees that mobile wallets need to move beyond payments to create a better overall buying experience for customers. “We asked consumers what they want in a mobile digital wallet, [and] the top thing that they said was coupons, discounts, special offers, that type of thing,” he adds.

As consumer adoption of digital payments grows, the distinctions between online and offline shopping channels will continue to blur, according to Tarleton. With these channels merging, mobile phones—and mobile wallets in particular—will be crucial to connecting the dots of consumers’ shopping journeys in stores and online, she says.

Furthermore, as consumer demand for instant results continues to grow, mobile payment solutions can meet that demand by bringing together integrated checkout processes with loyalty programs and customer preferences to deliver a comprehensive experience.

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