Report: Loyalty currency will drive mobile payment adoption

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By: RickFerguson |

Posted on February 4, 2016

Over at Mobile Commerce Daily, reporter Alex Samuely makes a strong case for the primacy of loyalty programme currency as the de facto currency of mobile wallet applications. His key point: consumer wariness about the security of mobile wallet transactions may encourage merchants and payment networks to give loyalty points a �starring role� in mobile transactions, as consumers view reward points as a safer way to pay for mobile purchases.

Today�s money quote comes courtesy of Danielle Brown, vice president of marketing at Points:

�If consumers aren�t using digital wallets, merchants aren�t willing to spend the time and cost to enable their own. This leads to a lack of infrastructure, which circles back to give consumers another major reason not to switch. So to spur adoption, digital wallets need to provide greater value for each transaction. Loyalty is a natural means of doing so, which is why you�ll increasingly see loyalty rewards being integrated into digital wallets.�

Other key points from the Mobile Commerce Daily article:

  • Security will drive loyalty integration: Samuely references a recent Gallup survey revealing that half of consumers not currently using mobile payments cite transaction security as their number one concern. Loyalty provides a way for consumers to �ease into� mobile payments. In addition, loyalty programmes offer �two-step� identification, requiring consumers to authenticate both with the digital wallet and the loyalty programme itself, a process that eases consumer security concerns.�
  • Merchants are already leading in loyalty-driven payments: Loyalty-centred payment applications such as those offered by Starbucks or Chili�s restaurant are popular with consumers and drive strong transaction volume through mobile payments. In addition, airlines such as Delta are transforming their loyalty currencies into more flexible payment options, and will soon integrate these currencies into mobile payments in their own applications.

The Bullet point: Loyalty marketers have long understood the power of loyalty currency to drive tender shift. A decade ago, companies such as ExxonMobil enjoyed great success leveraging currency to drive transactions through RFID-enabled payment devices at the pump, and retailers have long leveraged loyalty to drive tender shift away from general-purpose credit cards and toward proprietary store cards. We think Samuely is on the money. Marketers should expect swift integration of loyalty and mobile wallets in the coming months as the mobile payment wars heat up.

You can read the rest of the article here.

- Rick Ferguson