Will 2013 see Mobile Loyalty converge with Mobile Payments

In last couple of years we have seen considerable growth in mobile loyalty programs and innovative mobile payment solutions. Both are niche industries which show how customers are put in center of the ecosystem & given options to embrace their preferred method of payment & managing their loyalty for different merchants. It clearly shows acceptance of mobile loyalty programs as it is a big global problem to solve, as customers do not have time to track and manage their multiple loyalty cards & avail benefits from the same. Thereby merchants do not see return of investment (ROI) from their initiatives.


Loyalty & Payments are often considered two separate segments of mobile industry, 2012 shows a great synergy between the two as many startups have recognized the real potential niche to create a win-win model for merchant funding offers, technology provider, financial institutes and customers. The real challenge is to create a seamless user experience that will allow broader acceptance and viral growth.


Last month Google announced their decision to discontinue Punchd, its mobile loyalty service. It is quite possible that this product would be part of the strategy of integrating Punchd (loyalty solution) with Google Wallet (mobile payment solution). Google who is the leader in customer behaviour data and analysis would have a upper hand to define its own ecosystem to integrate their various products to achieve convergence in loyalty & payments rich experience for their customers.

Mobile Loyalty Program

Observing customer acceptance of connected technologies it is going to be important for marketers to identify mobile as their valuable strategy if entire loyalty eco-system. It would be more important to provide lucrative mobile loyaty incentives to customers for mobile payment companies to be successful. As mobile payments companies are merely a additional options of paying at the point-of-sale (POS) which has never been a problem as such with present card present technology.


There are many initiatives in market place to connect these two for a superior experience. Companies like Apple, Square, Starbucks, & Google are trying their own different approaches to design loyalty incentives, where merchants and customers come together to simplify customer experience. Like Apple launched “Passbook”, where consumers can collect their merchant loyalty cards, coupons, tickets, & boarding passes under one app in their pocket when they need it & where they need it & why they need it. But, it still lacks the payment aspect, it does solve of aggregating cluttered day-to-day plastic pieces under one location but that is done by so many other companies in last two years. Yes , it is nice convenience but not a ultimate solution.

Mobile Payments Solutions

The alternate mobile payment solutions are simple & make sense to create a good seamless user experience. It is helping merchants to reduce time to service each customer on point-of-sale (POS) checkout. But at what cost is the question which comes to my mind ?

Customer upgrades mobile phones to use new convenience pay paying, merchant upgrades its checkout software & point-of-sale (POS) to accept new type of payment acceptance technology. But the benefit here is going more the hardware manufacturers vs customer or merchants as it is just a fraction of return on investment for them.

Value of mobile payments goes far beyond customer convenience and merchant benefits when mobile loyalty meet payments at the checkout. When merchants can track, identify & reward customer for what customer would buy next time when the come to shop or what merchant should offer as motivation that customer would come back to shop. Here is when merchant would create a loyalty & this could be personalized & revenue generating opportunity.

In 2013 & 2014 we would see a lot of consolidation in mobile loyalty & mobile payment industry where loyalty companies would buy mobile payment companies and mobile payment companies might buy mobile loyalty companies. This would be the beginning where mobile payments would start seeing potential viral growth.

Companies like Google (with Google Wallet, Offers, Now, Punchd) & Square (with Pay By Square & Square dongle) have already started their efforts in this direction. Companies like Levelup, Freemonee, Cardlytics, VISA Offers, V.me, ISIS, Amazon, eBay PayPal, truaxis will be worth to watch how they break grounds and rise above all.

With 2012 mobile consumer sales reaching over $20 billion in US alone & global mobile transaction projected to reach more than $1 Trillion by 2015 mobile payments will continue to be major niche game changer for merchants. It would be interesting to see mobile strategy of financial institutes like Banks who would not want to be left out of loyalty payments convergence as they are the where your transactions reach ultimately.

Lets wait and watch 2013 ….

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Original author: admin