October 18, 2015
The expected takeoff of Wallets has been a hot topic for years in our industry. In the classical retail environment NFC enabled Mobile Wallets will finally deliver on its promise of speed and convenience. In remote commerce we have seen many attempts, high investments and some success stories related to marketplaces like PayPal and AliPay.
The general opinion is that Wallet concept needs value added services to gain adoption. Many see loyalty or vouchers being the killer functionality. We think it might be even closer to the actual purchase process, full integration of product delivery services in the checkout process.
My first experience with Wallets dates from 1998 when we deployed the ultimate secure but user unfriendly Secure Electronic Transaction Wallet for Maestro and MasterCard in the Dutch market. It gained some traction with early internet banking users who used their bank tokens for authentication. Most found the PKI based software too complex to install. Hence it was ditched in favor of the Dutch specific iDEAL payment method.
Nevertheless I remained a strong believer of the convenience concept of a centrally stored user profile, with strong authentication and secured payment card data. Now there is a next generation of cloud based Wallets for mobile internet and in-app payments in rollout. The focus of Visa Checkout and MasterPass is no longer on security alone, although this remains a key point of the proposition. Focus is on offering a seamless checkout experience to the consumer and increasing conversion for the retailer. Exactly how leading e-commerce players like Amazon have built there proprietary checkout solutions. The new Wallets should be referred to as checkout solution as they reduce the friction by eliminating multiple steps in the process. It’s no longer required to create an account with every retailer, select a suitable shipping option and enter all payment card details. These steps had become a barrier to obtain new customers for many merchants. In the market this results in decreased competitiveness of smaller and midsized retailers versus the leading e-commerce players.
In a recent project many of these items came together as by nature. Dutch leading parcel delivery company PostNL became interested in reducing friction in online ordering. As market leader they want to take responsibility for increased convenience for online purchases by consumers and thus enable the market as a whole to grow. Frictions experienced by consumers and reported by the Dutch Thuiswinkel.org retail organization where focused on the payments and logistic part of the customer journey and the burden of multiple registrations of their private data with the retailer, their payment institute and delivery organization. Frictions that will multiple with the growth of mobile internet and in-app purchases.
PostNL already made a first effort by building up a database with 3 million consumers. This database offered a service called PostNL Checkout. Purpose of this service was to give consumers the ability to share their personal data easily with webshops. Via PostNL Checkout the webshop could provide the consumer with track and trace functionality of the parcel. However there was no connection to the payment process so the level of convenience was insufficient for consumer and retailer.
Our observation is that new checkout solutions like Visa Checkout and MasterPass offer an international reach and a large online retailers network. These solutions offer customer authentication and secure exchange of payment card data with the payment service provider of the retailer. A logical evolution of the checkout process and a great platform to make a unique extra step: integration with parcel reception services.
PostNL would rollout several next generation delivery services, giving the consumer lead in the receipt of the parcel. Exactly a service that would be the ultimate value added service to integrate in a check out solution. Directly related to the ordering process and providing real convenience for the consumer.
After some research we were surprised to see that none of the checkout solutions in the market provided a full integration with logistical services. They provided a basic customer address book, but no customer preferences with regards to actual parcel reception or integration with order specific available delivery options.
In partnership with MasterCard and payment software development specialist Chess-iX we worked on the MasterPass API and created a full integration with both the PostNL consumer database and new delivery services. Therefore MasterPass Wallet users will be able to benefit from integrated services and convenience. To summarize the functionality offers;
- 2FA consumer authentication
- PCI compliant storage of credit- and debit card data
- Consumer address book (home, work, pickup)
- Consumer preferences for delivery services, specific day and timeslots
- Dynamic integration with order specific delivery services for the combination retailer-product-consumer-location and consumer preferences
- Under a modular architecture extendable with loyalty or other functions
- White labelled
Major benefit from this solution is that consumer barriers around payment, delivery and account creation are replaced with a single and simple checkout process. The profile stored in the MasterPass Wallet is easily kept accurate versus the distributed and outdated profiles with any merchant. It also provides the functionality to change preferences on payment or delivery per transaction or use your standard preference.
The solution is now certified and supported by MasterCard. PostNL decided to offer this development in a license format to the international market via Chess-iX. Wallet issuers can now benefit from this functionality, in the Dutch market with PostNL, in other markets integration with the local parcel delivery companies can be provided.
I my opinion the ultimate value added service for the Wallet as online checkout solution. Do you share my opinion?