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Today’s open-loop mobile wallet offerings generally concentrate on three things: payments, loyalty and promotions. Most are primarily focused on enabling the smartphone to connect with a merchant’s payment terminal (wirelessly in the case of NFC or optically in the case of 2D bar codes) for the purpose of transmitting the information that typically resides on the mag-stripe of a consumer’s traditional credit/loyalty card.
Some are taking a fundamentally different approach to the mobile wallet by concentrating on digital asset management. Apple, for example, has positioned their Passbook offering as a platform for receiving, organizing and dispensing digital facsimiles of tickets, passes, coupons, etc. How does Passbook work?
Take coupons, for example. When a Passbook user visits the app or website of a participating merchant or brand and sees a coupon/promotion that they like, they simply tap/click on the coupon’s Passbook icon to save it to their Passbook account. Once saved, the coupons are available for use by the consumer during checkout.
Now let’s consider a ticketing example. Flight or concert tickets, for example, can be purchased in the customary manner using an airline’s or concert promoter’s web site or mobile app. Upon completing the purchase, the user is presented with the option to save their boarding pass or event ticket to their Passbook account. Once saved, the assets are available for presentation at the relevant venues.
A quick search of the Internet indicates that merchants, brands, consumers and developers are rapidly endorsing Passbook. Given the simplicity of the Passbook solution and its apparent growing acceptance by all participant categories, one is forced to conclude that a community-centric approach to digital asset creation and management is creating a successful mobile wallet offering for Apple.
It appears that Apple has done with the mobile wallet what they did with the smartphone: they created an ecosystem that enables a network of third parties to use their collective intelligence to increase their wallet’s value.
In terms of value to the consumer, it is clear that there is great value in a mobile wallet ecosystem that increasingly enables the mobile consumer to easily find, select, organize and use digital assets. Consumers are benefiting from this by saving time and, in many cases, significant money. The same, unfortunately, cannot be said about other open-loop wallet solutions – especially those with a payment-centric focus.
Truth be told, today's payment-centric wallets neither offer an ecosystem nor offer digital asset management. Most, in fact, provide little to no discernable value to the consumer at all. Some actually complicate the consumer's life by requiring them to execute nearly twice the number of steps to consummate a purchase as they would with a traditional credit card. Since the consumer receives no benefit for expending the extra effort, they either use the offering only once or eschew it altogether.
Most payment-centric wallet providers actually recognize this and are forced to promote less tangible benefits such as the promise of greater security and ease of replacement in the event of a wallet’s loss. Unfortunately, this is not a value proposition that would entice most consumers to change their habits and behaviors. In my experience, consumers generally don’t like change and they especially don’t embrace change for the sake of addressing a potentially negative experience that they feel, rationally or not, is in their power to avoid.
Considering the above, the key lessons for the open-loop mobile wallet provider are these: First, your solution must greatly simplify the consumer’s life or provide them with a tangible financial benefit. Second, it must support an ecosystem wherein a community of participants can easily contribute content that will enhance the wallet’s value. Third, your solution must easily support digital asset creation and management. Finally, it should emphasize payments only after creating a tangible value proposition for all ecosystem participants. Do these things and your open-loop wallet will be successful.
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