It’s time to throw out that old, ratty wallet, cut up those plastic credit cards, and tear your dollar bills into little pieces. Okay, that’s a bit dramatic. What these actions represent, however, is the digital revolution of payment. In recent years, the development of the mobile wallet has become the payment method of choice for consumers, coinciding with the fact that there are almost 2.1 billion smartphone users worldwide. Gone are the days where an overstuffed, hefty wallet is a necessity; instead, welcome to the age where all of your cash, coupons, and other purchasing information are stored on your mobile device.
Along with this transition to a digital payment approach, traditional marketing and engagement methods are transforming as well. Whereas print advertisements and commercials once dominated, the mobile wallet is part of a larger movement towards highly targeted ads and digitized incentives and promotions.
The increase in the number of mobile wallet users is the greatest indication that a trend is emerging in the realm of digital payments: There were 12.7 million near-field communication (NFC) payment users at the start of 2014 and 28 million by the end of that year. This number is expected to reach 48 million by the end of 2016, a prediction that proves digital payments are here to stay.
Despite the necessity for retailers to have an NFC-compatible payment terminal, the demand is great enough that over 700,000 retailers in the U.S. have it already installed and more are joining rapidly. With the ability to hyper-target consumers, gain real-time insights, and increase customer retention and engagement, retailers are realizing just how important the mobile wallet is to their customers.
Why is the mobile wallet so popular? The easy answer is convenience: Most consumers carry their mobile device with them at all times. Therefore, they can carry their wallet at all times too – all streamlined into one single device. Additionally, the mobile wallet contains features that a traditional wallet does not: digital coupons that can be discovered and downloaded straight to your phone, security measures such as encryption to safeguard your finances, and mobile loyalty programs accessible only to those with the company app downloaded to their wallet. With all of your payment methods in one spot and additional incentives, the mobile wallet holds plenty of appeal and continues to attract a greater audience.
For retailers, the mobile wallet presents a new opportunity for marketing and enhancing engagement. One of the greatest advantages is the implementation of mobile loyalty programs and incentives. Similar to past programs, mobile loyalty programs mean people shop more often and feel more valued by the company. Thus, increasing brand loyalty.
Not having to rely on physical proof of a loyalty program membership makes it more accessible and increases the number of total subscribers. In terms of incentives, retailers can also issue mobile coupons directly to the mobile wallet. As a result, there was a 141% increase in digital coupon redemption from 2012-2013. The importance of convenience is proven again as customers react to being able to access coupons on their mobile device.
Beyond these benefits, the mobile wallet also allows a retailer to access consumer information in a new way: real-time data on consumer purchases, feedback, and more can be easily found and used by companies for their marketing tactics. It becomes even easier to target consumers by using this data. For example, when someone with the company app in their mobile wallet is nearby the store, they can receive a notification of a coupon. By decreasing the time between the call to action and the purchase, it increases in-store visits and revenue.
The mobile wallet represents the future of payments, and it’s only the first step. By streamlining how a person shops, the digital payment method appeals to the innate consumer desire for convenience. The additional marketing advantages, such as targeted coupons, make this an appealing tool for consumer and retailer alike. With our wallets on our phones and watches now, what can we expect in the future? Will it be vocal recognition software that lets you pay by stating your name at the cashier? Or a fingerprint scanner that lets your appendage be your credit card? No matter what it is, rest assured that it will continue the trends that the mobile wallet has already begun.