Large banks such as Chase, which is busy pitching its new Chase Pay product to merchants before rolling it out to its millions of customers by mid-year, are working to keep mobile payments under their own umbrella and boost customer loyalty in the process. We believe in consumer choice,” says Jennifer Roberts, president of Strategic Alliances & Loyalty Solutions for Chase. “We recognize that some customers will absolutely love the Apple experience and our cards will be in Apple Pay, but others will trust our bank to offer a digital wallet.”
Adding value to mobile payments
With all of the mobile payment options flooding the market, experts say the biggest players will have to rise beyond simply offering a digital wallet. “Consumers want more,” says Rana. “What is the value-add if they use your payment mechanism?”
According to Lewis, the three biggest must-haves will be security, ease-of-use and loyalty. Security, he explains, is table-stakes for any mobile payments solution: “That is the price of admission.” As for ease-of-use, the open-loop payment providers, whose offerings can be used anywhere, have the edge.
That leaves loyalty up for grabs. Retailers and banks are beginning to offer loyalty card rewards and coupons with their mobile payment options to sweeten their offerings. Starbucks, for example, has long been a leader in combining its mobile payments and loyalty offering in its My Starbucks Rewards app. Chase Pay will offer merchants the opportunity to connect their loyalty programs directly into the payment experience. And even an open-loop network such as Apple Pay has integrated with Walgreens’ loyalty program.
Retailers also need to understand the preferences of their customers when it comes to what mobile payments options they offer. “CIOs need to be setting up pilots to test some of these alternate payment providers and see how resonates with their current customers,” says Lewis. “It’s not just about picking one and rolling it out everywhere, It’s more about understanding what your customer is asking to do at the POS.”
We’re still at the beginning of the journey
In the next year or so, there will be more attempts to come up with wallets in every category, says Rana — more technology players, banks and retailers will try their hand. “It’s not a short game, it’s a long-term play over the next five years,” he cautions. “It’s very difficult to say who will win — I’m sure there can be multiple winners. There are different scenarios in which various players can have an edge.”
Particularly intriguing, says Lewis, is Samsung Pay’s Magnetic Secure Transmission technology, which allows customers to make a mobile payment at any terminal with a magnetic stripe reader. “I think that’s a very interesting development that starts to solve for both security and ease,” he says.
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