Mobile Wallets Must Move Beyond Payments to Escape Infancy

A risk of card fraud and popularity of smartphones among various users has led to the emergence of “mobile wallet” solutions for point-of-sale (POS) and online shop payments. However, mobile wallets remain in a nascent stage until service providers can deliver value beyond just payments.

Digital payment service providers are both competing aggressively and willing to take risks by offering attractive offers and unrealistic discounts in order to topple their rivals as per growing digital marketing concepts across payment industries. Many companies offer mobile wallet services, but the four biggest names are Apple Pay, Android Pay, Samsung Pay and PayPal. The Value proposition of a mobile wallet is not about payment, but rather attractive value-added services that can be offered across a mobile-enabled environment. Examples of value-added services include coupons and offers, loyalty solutions, product information, digital receipts, and warranties.

Here, consumer point of view will also be interesting. Consumers today have various options when it comes to mobile wallet offerings. At the same time, each service provider has their own USP. But from a consumer standpoint, mobile wallets should carry features like enhanced user experience over conventional payment instruments, single tap purchase, financial data safety, interoperability between service providers, ability to link payment instruments and incentives to use mobile wallet (e.g. rewards and cash-back).

Mobile wallet also has three main features which can be viewed as a value-added service:

Pre-purchase: Giving consumers the capability to include offers and coupons that have gift cards and rebates. There will be some predefined offer code and cash back facility for customers.

Purchase: This option includes NFC (Near Field Communication)-based and QR code-based solutions. The following are NFC-enabled main features of mobile wallet solutions:

  • Bill payments, OTC payments, money transfers, purchases and many other user friendly functions through its “tap and pay”.
  • Ability to issue bills, coupons and credit/debit cards over the air.
  • Variety of consumer interfaces: Mobile application, Web, SMS, IVR, STK, USSD.
  • Single sign-on access to multiple vendors and systems.
  • Loyalty and Coupon sub-accounts for a 360-degree Solution.

Post-purchase: The ability to manage payment details after a purchase is key for a mobile wallet solution. This will also involve transferring payment to another card, as well as expense management.

Secure, simple and fast access to cash, along with value-added services will lead to a greater adoption rate by consumers. Ultimately, this will help us transition to a cashless society, which in itself has its own benefits.

 

The article was originally published on Payments Source ( on July 11, 2016) and is re-posted here by permission.

Amit Bhute

VP & Global Head – Payments Practice, VirtusaPolaris. Amit has over 15+ years of experience in the payments industry and has worked across the board for investment banks, corporate banks and retail banks all within the payments space leading large scale transformational projects. He is currently leading the payment practice at VirtusaPolaris and actively participates in various industry forums keeping a close eye on evolving trends and fintechs.

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