To "Pay" or not to "Pay"?
People don’t use their mobile phones to make telephone calls nearly as much as they used to. They are using them to surf the internet, send instant messages, even wake them up in the mornings. The relentless wave of mobile-inspired innovation is continuing and now includes mobile payment.
Issuing banks often ask me about the merits of implementing mobile wallets from the ‘Pays’ (Apple Pay, Android Pay and Samsung Pay) versus their own-brand wallets. To ‘Pay’ or not to ‘Pay’, that is the question.
If the ‘Pays’ are coming to your market, you have choices. You could be part of a market-wide ‘Pay’ launch. You could create your own mobile payments solution (or, perhaps more accurately, your own mobile solutions involving payments). Large issuers could perhaps afford to do both.
The question becomes interesting for customers in smaller markets with fewer consumers, fewer NFC-enabled handsets and fewer contactless acceptance terminals. If the ‘Pays’ are not coming soon to your market, how do you best get started with mobile wallets?
Three reasons to be optimistic
I’m quietly optimistic about own-brand mobile wallets for three main reasons.
Firstly, the contactless acceptance infrastructure is improving — in Europe at least. Mastercard has mandated merchant acquirers to support on-device cardholder verification for high-value purchases on contactless-enabled terminals by this year. This follows the contactless POS terminal mandate in Europe announced by Mastercard and Visa in 2014.
Secondly, tokenization and host card emulation (HCE) on the issuing side are also in place. These enabling technologies can potentially drive increased mobile contactless payment in-store via NFC, and tokenization is critical to in-app payment success.
Thirdly, I’m a firm believer that no-one knows local customers better than local players. Issuers have a huge opportunity to tailor mobile propositions for their particular customers to differentiate themselves from the generic ‘Pays’ and other local competitors.
Learning from giants
The customer proposition and experience is critical to the adoption and success of any product. This may sound obvious. Yet the payments industry sometimes suffers from too much technology for technology’s sake.
Apple, Google and Samsung and other consumer-facing technology brands specialise in understanding consumers as well as technology. They establish what consumers need and value — and deliver it. Then they find new and better ways to deliver it. Any issuer wanting to launch their own-brand mobile wallet could learn from this.
The payments industry can also be too narrowly focused on, well, payments. The technology giants have understood the real prize. Mobile wallets are less about payment and compartmentalising all consumer spend on a mobile device, and more about creating closer, deeper, more profitable relationships with customers through their mobile. This is another key learning for issuers.
The strategic objective for issuers is to create new value for consumers, which unobtrusively reinforces your brand in multiple contexts, multiple times per day. Mobile wallets are a vehicle to create customer stickiness. Payments are part of the proposition, but they are not the be-all and end-all.
The real value is beyond payment, which is why I advise issuers to partner to create new value. Think about local tie-ups with those in the transit, taxi, fast food, parking and vending sectors for everyday, habit-forming usage. There is plenty of scope for new use cases and new business models to monetise data, cross-sell to customers, serve appropriate advertising and so on.
Also, think about data and how you help your customers get more value out of their own data. I don’t know about you, but my monthly card statements are not very illuminating. The data exists digitally, so there must be better ways to help customers store receipts and product guarantees, budget, save or simply have a clearer overview of their expenditure.
For more information
When it comes to mobile wallets, my best advice is to start now. Start with thinking about where and how you can change the payment experience for the better, find your niche. And build a roadmap to evolve and expand your proposition.
Tieto has experience of working with issuers in various countries and regions on mobile wallets. To find out more about how we could help you with your strategic objectives, please contact me Valdis Janovs: firstname.lastname@example.org or email@example.com.