Cellum Insights

More than ever mobile wallet-makers need to listen to merchants

Last week a Bloomberg “gadfly” columnists penned an article arguing that Starbucks has a lot to teach Apple and Facebook and other firms working in the mobile payments space, given the Seattle-based coffeehouse chain’s amazing success with its own payment and rewards app.

While the argument may be new to some, it’s old news to us. In fact, almost two years ago to the day we wrote an item trumpeting the Starbucks app and the larger importance of loyalty programs. And if much in the mobile payments industry has changed over the past 24 months – most visibly with the launch of Apple Pay, Android Pay and Samsung Pay – the logic of integrating loyalty programs and similar features into mobile payment systems has only grown.

Of course, there are many reasons to believe that over time mobile devices will come to play a dominant role in “plain vanilla” payments without any loyalty, couponing or other additional value-added services. And this will be the case for both proximity (in-store) and remote (online/in-app) payments.

But for the time being, a large share of potential users will find little incentive to make the switch, while “power-users” of mobile payment systems will tend to be driven by more than just the added convenience and security offered by better mobile wallet solutions.

To be fair, the three “Pays” (Apple, Samsung and Android) are serving a useful function in popularizing the overall benefits of mobile payments. And there has been some recent movement towards supporting loyalty scheme integration and coupon redemption. (Android Pay offers integration with MyCoke reward points, and Apple has announced that it is working on something similar.) But even this only represents a small fraction of the value-added services mobile wallets can offer merchants, including location-based services, promotions and pre-ordering, which is one of the Starbuck app’s other great features. The “Pays” are also only now beginning to address the vital market for remote payments, as well as the world beyond the United States.

It is because of this that independent mobile wallet providers need to tightly focus on the unique needs of individual merchants, and the relationships such firms enjoy with their customers. Likewise, merchants need to fully appreciate that they are better off with m-payment solutions that allow and encourage their customers to do more than just pay. And the list of value-added services offered by best-in-class wallets is growing almost as fast as the universe of mobile-savvy consumers ready to go to the next level of engagement with their favorite brands.