Mobile Payments Today: June's top reads
With consumer mobile wallet adoption in a rut of sorts halfway through 2017, the question about what providers can do to boost use continues to come to the surface in conversations throughout the industry.
Yale Vinson, a technical product manager for Blackhawk Network, wrote a commentary for Mobile Payments Today that pleaded with mobile wallet providers to focus less on payments and more on ancillary services when it comes to these products. Vinson's piece, which was the most read in June, echoes what others have said about the topic. But at the moment, it seems as though few people are listening to those pleas.
Rounding out the top five stories in June are pieces about anomalies when it comes to the digital discussion; the current state of blockchain regulation; a new take on loyalty; and how pay-at-table can help restaurants catch up to EMV.
5. "How elotes and tamales keep a cashless society at bay" — A Chicago neighborhood is one example of the many anomalies when it comes to the digital discussion and pushing mobile payments forward.
Once the summer hits in Chicago, street food cart vendors are not hard to find in the Mexican-dominated Pilsen neighborhood.
You notice them by the 18th Street Pink Line stop. They're scattered around the perimeter of Harrison Park, a staple in the neighborhood for decades.
Most vendors sell the same kinds of foods. Elotes, which is grilled Mexican street corn served with an array of condiments mixed into a creamy concoction, and tamales are the most popular items.
And if you want dessert, it's not hard to find a "paleta man" pushing a cart filled with ice cream bars and ice cream sandwiches.
But in a world that continues to go more digital and mobile, there's only one way to pay for a tasty treat from these hard working vendors: cash.
4. "The current state of blockchain regulation" — With new technologies, it takes awhile for regulation to catch up. Blockchain technology is no exception. While we are slowly beginning to see standards emerge, the reputation of blockchain is still marred by the criminal aspects of bitcoin.
With new technologies, it takes a while for regulation to catch up. Blockchain technology is no exception. While we are slowly beginning to see standards emerge — for instance, New York state's new BitLicense regulations — the reputation of blockchain is still marred by the criminal aspects of bitcoin.
Bitcoin itself recently took a hit when the SEC ruled against the Winklevoss twins' proposal for an exchange-traded fund for bitcoin. The SEC expressed concern about the ability of powerful, unregulated Chinese exchanges to manipulate the price of bitcoin. This underscores a key aspect of virtual currency regulation: It is still in its infancy.
"The current regulatory landscape when talking about [distributed ledger technologies] is simultaneously immature and complex, and it depends on what component of the DLTs we are talking about: cryptocurrencies; blockchains; shared ledgers; smart contracts; etc.," Javier Sebastian Cermeno said in a report by BBVA Research. "The regulatory treatment of each of these components is different, although [the] lack of specific regulation is a common factor."
3. "A new take on loyalty" — As loyalty programs have expanded to include more emotional benefits, they have seen the value associated with meeting a consumer's needs. Now companies are competing for customer relationships rather than customer memberships.
I was recently engaged in a lively debate with my colleagues about the value of loyalty programs and how they have evolved over time. One group suggested that loyalty programs are a dying breed and argued that their original purpose has been taken over by customer experience design. The other group still considered loyalty programs as a necessary differentiator in this highly competitive world.
To put the state of loyalty in perspective, according to NASDAQ, a typical U.S. household is enrolled in 19 to 29 different loyalty programs, but only actively uses five to 12 of them. Further, active use of these programs has steadily declined since 2010 at a rate of 2 percent to 3 percent per year. These stats indicate, if nothing else, that loyalty programs are going to have to work harder to stay relevant.
It used to be a battle of the best products out there — whether that was a camera, a sweater, a filet, or a flight. Loyalty programs were built to differentiate brands from one another, largely focused on delivering functional benefits like rewards or members-only discounts. These programs were managed as another marketing channel, creating new levers that could be pulled to increase short-term revenue and profit amongst the customers that were identified as having the highest value.
2. "For restaurants, pay-at-table devices are a chance to catch up with EMV" — Pay-at-the-table devices, which generally accept both EMV and contactless payments, could start to appear at restaurants in a big way during the next couple of years.
As the second anniversary of EMV's official debut in the U.S. approaches in October, it' a good time to review what’s happened over the past two years.
The U.S. Payments Forum estimates that as of late March, banks (as well as American Express and Discover) had issued some 600 million chip cards. MasterCard and Visa estimate that almost 2 million U.S. point-of-sale terminals can accept chip card payments.
But here's the downside: Javelin Research & Strategy estimates that approximately 15 million POS terminals still need to be upgraded to accept chip cards. That's a staggering number almost two years after the EMV liability shift date in the U.S.
However, there is a silver lining for businesses — particularly restaurants — that have yet to upgrade. Pay-at-the-table devices, which generally accept both EMV and contactless payments, could catch on with restaurants in a big way during the next couple of years.
1. "Mobile wallets: Moving beyond payments" — Millions of Americans use smartphones for everyday tasks such as taking pictures, working out, or arranging transportation, yet mobile wallets have struggled to gain traction among consumers.
Millions of Americans use smartphones for everyday tasks such as taking pictures, working out, or arranging transportation, yet mobile wallets have struggled to gain traction among consumers.
While there are new services and offers that can be integrated into mobile wallets in order to make them more attractive to consumers, the industry has simply been missing the mark by focusing primarily on payments, instead of more complete, engaging mobile commerce offers.
With these trends in mind, the larger focus for the entire industry should be to move beyond the payments utility of mobile wallets, and consider the overall commerce experience, including alternate payment forms, offers, loyalty points, etc. But how exactly do mobile wallets move beyond payments? The solution is to find creative mobile commerce pieces that exist seamlessly alongside mobile payments.
Will Hernandez / Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.