Contributed By Barbara Ballard, C-SAM Vice President of Customer Experience and Marketing, and Shubhrendu Khoche, C-SAM General Manager for Asia-Pacific

Barbara Ballard

Most people carry a wallet with them at all times, but increasingly that wallet is moving inside the other thing they always carry: their mobile phone. Although mobile wallets are a relatively new option for most consumers, a new Yankee Group report says 70 percent are already interested in them, and 14 percent of that group are using them.

Shubhrendu Khoche

Merchants, marketers and ad agencies that haven’t begun developing mobile wallet strategies risk being left behind as more of that interest evolves into usage. In the case of merchants, the mobile wallet opportunity isn’t limited to increasing sales by enabling convenient, cashless payments. It also includes advertising and promotions, both of which can increase brand loyalty and sales.

There are a number of reasons why savvy retailers throughout Asia-Pacific and abroad are already focusing on mobile wallets:

Increased marketing effectiveness, especially micro-targeting based on purchases, shopping carts and more. A wallet provides retailers with those kinds of actionable insights, enabling them to provide suggestions about companion products, or offer on-the-spot discounts, or the ability to order a size or model that’s not in stock and have it shipped to their home. These suggestions and promos help retailers address one of their biggest threats: showrooming.

 Improved efficiency of operations. Transactions are more convenient for customers when they can share their coupons, loyalty and payment information in a single tap. Repeat orders can be started, and even completed, before the customer reaches the point of sale. That convenience can foster loyalty and repeat sales. Wallets also can speed up the return process, such as by avoiding disputes – and fraud – that occur when a paper receipt is lost. Returns cut into profitability, so the less time employees spend dealing with them, the smaller the hit to the merchant’s bottom line.

For some verticals, this efficiency enables them to mitigate some of their biggest problems. For example, wallets are an ideal way for quick-service restaurants and to shorten queue wait times. They also can make it easier and faster to place custom meal orders, or enable placing the order from outside and then walking up to a special counter to pick it up instead of waiting in line. This convenience can have a viral effect because as more customers see other customers getting their food faster, the more likely they are to want their own wallet.

Access to valuable customer behaviour data. Retailers can track how specific customers and customer segments move through the store. Product scanning provides insights into which products customers want more information about. Dwell-time data can uncover previously invisible problems.

Improved customer engagement. When a known high-value customer enters a store, employees can be notified with a photo, name, past buying history, recent social media engagement and more, enabling a high-touch luxury customer experience. In a discount retail location, a mobile wallet can augment in-store displays with Web information, cross-selling information and selling based on purchase history.

Shoppers experience their own set of benefits:

Convenience. Their mobile wallet stores all of their payments, e-coupons and receipts instead of having that information scattered across multiple apps and other storage locations. Convenient access increases the likelihood that they’ll use that information, such as redeeming an e-coupon, a purchase that the merchant otherwise might otherwise have missed out on. This central repository also makes tracking expenses easy, both for business travellers and consumers watching their budget.

Speed. A wallet can enable in-aisle or POS checkout faster than other forms of payment. It also can facilitate returns, where the customer probably is already frustrated and not interested in standing in a long line. A wallet is particularly valuable for quick-service restaurants – not just for the user, but also all of the people in line behind him.

A richer customer experience. The mobile wallet provides direct access to relevant product information, shopping lists and purchase histories for that merchant, including those made online. It’s also an opportunity for retailers to push out product recommendations based on past purchases and in-store-only discounts, as well as offering the option of ordering products that aren’t in stock and having them shipped to the customer’s home.

Improved experience with retail employees. Mobile wallets streamline tasks such as routine transactions, freeing sales associates and other customer-facing employees to spend more time providing better service to customers. Time one spent wasted with cash, cards, coins and returns now can be spent cross selling, upselling, guiding shoppers through their options and building the kind of rapport that fosters brand loyalty.

What Makes a Great Wallet?

For retailers, picking the right wallet solution is critical. Make sure your provider can help you with the strategy and implementation regarding these questions:

Should wallet functionality supplement your smartphone app or replace it? The decision depends partly on whether your app has customer-benefitting features that the wallet can support just as well.

Should your mobile wallet convert cash customers first or ride on rewards programs offered by scheme payment cards? The decision depends on factors such as how many of your customers currently pay with cash and customer participation in awards programs.

Does your business need custom functionality, such as a robust loyalty rewards platform or closed-loop payments? Even if you don’t need custom functionality at launch, it’s still wise to see if the wallet can support it if your strategy or market conditions change.

How do you want to integrate wallet functionality with both physical and online commerce? Can it help facilitate cash on delivery and escrow mechanisms? Can it build an alternative channel for establishing trust between the buyer and the seller?

What types of functionality do you want? Common choices include payment, receipts, integration with loyalty and stamps programs, coupons, offers and e-commerce integration. Also consider how the wallet integrates with your existing e-commerce and retail inventory systems.

How much investment are you able to make in your POS? Does a mobile POS solution make business sense for your business to increase spend and reach? A “virtual reader” or an online solution can involve no POS investment if your customers have reliable and relatively inexpensive data connections. Can you also offer such services over SMS where 2.5G, 3G or 3G data services are unavailable? SMS support also is key for reaching consumers who don’t have data plans, such as because of limited budgets.

Do you have NFC and alternate methods planned in the future? Pick a platform that fits both your short- and long-term business strategies. For example, consider starting with barcodes or QR codes that customers can display or scan with their phones. QR codes are relatively fast, easy and inexpensive for retailers to implement, such as by using existing POS scanners and then completing the transaction in the cloud. QR codes also enable you to serve any customer with a phone that has a camera – not just smartphones, but feature phones, too. Then when both your POS equipment and market are ready, add NFC, which ABI Research says facilitated US$4 billion worth of wallet transactions in 2012 and is on track to handle US$191 billion annually by 2017. This strategy highlights the value and importance of selecting a wallet solution that supports NFC, QR scan and QR display with cloud-based transactions.

New technologies periodically reinvent industries. That’s exactly what mobile wallets are doing for retailers and other merchants. It’s not too early to begin developing a mobile wallet strategy. In fact, there’s a good chance that many of your competitors already are.