May 14, 2016
Payments are evolving—and that should not be news to anyone who owns a smartphone. Thanks to mobile wallets and other digital payment solutions, traditional currency is moving beyond tangible bills, coins and credit cards.
However, despite the fact that mobile wallet technology is becoming increasingly sophisticated and more merchants are introducing their own wallets, consumer adoption rates have yet to take off. So what’s the extra component that’s needed to encourage adoption? Loyalty.
Loyalty program membership is skyrocketing in the US. According to COLLOQUY research, US consumers held 3.3 billion memberships in customer loyalty programs in 2015—a 26% increase over the number of memberships reported in 2013.
With consumers’ affinity for loyalty programs, it’s no that surprise mobile wallet providers are looking to integrate loyalty capabilities to increase adoption rates. If mobile wallet providers can incentivize consumers to use their wallet by offering the ability to earn points with every tap of their smartphone, track their balances and transfer points and rewards between programs, and burn their points effortlessly with every transaction, consumers will be more likely to replace their traditional plastic credit card. And as an added bonus, mobile wallets provide a new and more effective customer engagement tool, offering merchants a way to drive specific behavior and connect with their customers right at their fingertips.
Several of the most popular mobile wallet solutions, including Apple Pay, Samsung Pay and Android Pay already incorporate loyalty capabilities into their platforms, allowing users to store multiple rewards cards into their app with the hope of encouraging users to transact with the wallet every time they need to use their loyalty card or check their loyalty balance. But while this is a step in the right direction, mobile wallet providers have the opportunity to go even further by enabling full integration of loyalty points into their wallet, allowing users not only track all of their loyalty programs in one place, but also exchange those points across multiple programs and redeem seamlessly with every transaction.
The presence of loyalty capabilities in these mobile wallets is indicative. Loyalty is more than just an add-on feature. Rather, loyalty integration could likely be the key to getting consumers on board with digital wallets, and reflectively, that digital wallets are the prime channel to make loyalty points easier to collect and redeem, therefore making loyalty programs themselves more enticing.
The use of loyalty points in mobile wallets offers important benefits to both consumers and merchants. There are several reasons why 2016 will be the year that loyalty points become a mainstream offering in mobile wallets.
Loyalty and mobile wallets are two of the hottest trends in the digital payment space. By marrying the two concepts to allow consumers to earn points from multiple programs, transfer points and rewards between programs, and burn their loyalty points effortlessly with every transaction, brands and mobile payment technology providers can take an important step toward meeting the evolving needs and preferences of today’s digital marketplace.