Retailers ponder ways to embed loyalty into mobile wallets
What customers want is an easy way to use their fully functional mobile wallets to pay for everything from airline tickets to pharmacy items to clothing.
And they'd be extra happy if their airline miles and retailer rewards balances could be incorporated into those transactions.
Companies want the same functionality, too, and some brands are already supporting mobile wallets with built-in loyalty capabilities – and if they're not, they should be.
That functionality is particularly important if businesses want to be ready to capture the additional revenue streams that await from the multiple-currency capability for payments and transactions when loyalty is a key component of customers' wallets.
The mobile payments ecosystem is definitely moving that way.
A recent article in Luxury Daily notes that mobile wallets with rewards automatically built in as a form of tender might persuade today's security-conscious consumers to start using mobile payments more. According to the article, "some consumers find loyalty points to be a safer way to pay, meaning that marketers not currently offering mobile wallet-reward program hybrids are set to be on the losing end this year."
On the retail side, U.S.-based Walgreen's is the first brick-and-mortar store to incorporate a loyalty program directly into Apple Pay, according to RetailCustomer. Walgreen's customers and its Balance Rewards loyalty members simply add their rewards card to Apple Pay's wallet app; from there, they can redeem the rewards by holding the smartphone near the contactless payment terminal when they check out.
In late 2015, MasterCard announced it is working on industry standards for integrating loyalty rewards into mobile wallets and mobile payment apps, according to NFCWorld.com. In MasterCard's forward-looking landscape, for example, airline passengers will "open" their mobile wallets, select the stored loyalty card (or airline miles program), choose the amount they want to redeem, and make a payment by tapping the device on/near a contactless payment terminal.
Some travel-related mobile wallets already enable passengers to store payment info and miles/rewards balances in their mobile wallets. At checkout, passengers can choose to pay with a card, with miles, or with split-tender capabilities (part credit/part miles) with a few simple taps.
Likewise, an executive with the hotel-booking site Booking.com recently told Tnooz that the company wants to make it possible for customers who book a hotel room to earn rewards from that hotel's loyalty program – even if the reservation isn't made directly with the hotel. It's likely that online travel agencies will eventually build in the same capabilities for passengers who book airline tickets – allowing customers to earn miles (and store/use them in their mobile wallets) even if they do not book directly with the airline. All that's required are agreements between hotels and online booking/travel agencies to support the rewards issuance.
Look for mobile wallets and loyalty to move closer and closer to each other, especially as more mobile payments technologies roll out, as customers begin using their mobile wallets more, and as retailers, brands, airlines and hotels embrace the value of treating their rewards, points and miles as marketplace currencies.
Kristian Gjerding / Kristian Gjerding CEO of CellPoint Mobile, a payment solutions provider for airlines. Gjerding has helped shape the digital payments environment through his work with best-practice standards groups at airline organizations globally.