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Efforts to combine mobile wallets and loyalty programs have had mixed success over the years, but many companies are undeterred. Here are a few that are working to find the right mix of technologies.
Old meets new
Harland Clarke will spend an equity value of $630 million for RetailMeNot, which offers a mobile app that uses geolocation and notifications to tell shoppers they are near a location with a discount offer.
By adding RetailMeNot, Harland Clarke Holdings will substantially increase its digital presence and gain a direct-to-consumer relationship with the RetailMeNot brand, as well as adding access to new channels and products for its clients.
Harland Clarke can benefit from the deal in a couple of ways. First, it can respond to the pressure that's on all legacy payment companies, ranging from card networks to processors to terminal manufacturers, to diversify in merchant services. Harland Clarke Holdings' corporate roster already includes Valassis, a marketing data company; and RetailMeNot provides real-time deals that can link promotions to sales at the merchant.
It also enables Harland Clarke to fight against the encroachment of competitors that match omnichannel retail marketing to sales, such as InstreamGlobal and Catalina. Other companies are pursuing the market from the mobile shopping side, such as Shopkick and Foursquare.
Beyond transit fare
Transit systems provide a clear use case for mobile payments, allowing commuters to avoid lining up at ticketing machines when they're already in a rush to get to their destination. But many of the perks of mobile wallets, such as targeted offers, don't apply to them.
"If a subway system is delayed because of high volume, there's no point in going to a parent who has to pick up a child at school and sending a notification saying, 'If you use the train an hour later you can get a free cup of coffee.' That travel and payments data has to be used for something different to manage travel volumes," said Ian Slater, senior vice president of enterprise partnerships at Mastercard.
Mastercard is in the midst of dozens of transit technology projects in partnerships with cities that range in geography, technology culture, need and level of automation. The card network's goal is to grow its own transaction volume by combining payments with other use cases, even if those use cases prove elusive.
The largest recent initiatives include New York, where the MTA's eTix mobile app, a partnership with Masabi, is used on Long Island Railroad and Metro North trains. In the first three months of deployment, the app was used by more than 280,000 riders and now accounts for 8% of ticket sales for both LIRR and Metro North. In Bogota, Colombia, Mastercard introduced an open debit card to pay fares on more than 10,000 buses, with more than 20 million trips purchased in the first year. Mastercard has also partnered with Singapore's Transport Authority to power contactless ticketing across all transit modes, the first city in Asia to adopt the technology.
Restaurants are taking many approaches to handle mobile payments, pay-at-the-table and loyalty, including building entirely new systems and introducing new apps.
Los Angeles-based California Pizza Kitchen (CPK) in February unveiled a new system in its 200 U.S. stores that married its existing restaurant management and payment system from NCR with a new, app-based payments approach from Newton, Mass.-based Paytronix Systems Inc.
"The omnichannel capabilities of the new CPK app, in concert with our mobile-optimized digital and social marketing strategy, allow us to reach guests on their preferred technology platform in a relevant and seamless way," said Ashley Ceraolo, CPK's senior vice president of marketing, in a recent blog post.
CPK’s in-app payment system integrates with the CPK Pizza Dough Rewards program that enables diners to earn, track and redeem purchases and rewards, and opt in to receive real-time marketing messages for in-restaurant, online ordering and takeout experiences. Diners pay by linking a payment card within the app, speeding up the checkout process by about 12 minutes, which drives more efficiency during peak hours, Paytronix said.
A woman look at an Apple Inc. iPhone 7 Plus at a SoftBank Group Corp. store in Tokyo, Japan, on Friday, Sept. 16, 2016. Apple hopes its new iPhone 7 will help to stem a two-quarter decline in iPhone sales by enticing users to upgrade to the 7's faster processor and expanded memory options. Photographer: Yuya Shino/Bloomberg
Vending machine loyalty
Vending machines are perhaps the least personal way to sell items, but mobile wallets are providing a fresh visibility into their customers' habits.
It's even possible to use mobile wallets such as Apple Pay to enroll vending machine customers into a loyalty program — a concept that seems at odds with the impulsive and anonymous nature of most vending machine purchases.
"When a consumer uses coins or cash, all you can tell is volume over a long period of time," said Amelia Powell, USA Technologies' senior marketing director. "But with mobile, we can pin down when transactions are happening and can report on that information."
In a deal announced in January, USA Technologies (USAT) will integrate its MORE. loyalty and payroll deduct platform with Apple Pay for use at as many as 300,000 machines across the U.S. Companies that operate unattended machines, such as vending machines that dispense soda and snacks, will be able to more closely tie contactless mobile payments to marketing. Consumers can enroll and have the USAT loyalty card added directly to Apple Pay.
bills and coins in a cash register
Christy Thompson - Fotolia
Ingenico ePayments is giving merchants a new way to engage consumers at the checkout by offering a choice of games enabling participants to win merchandise instead of having to pay for it.
Ingenico Gamified Checkout provides a series of customizable games including a scratch card, a slot machine and a wheel of fortune presented at the checkout for online merchants or on payment terminal screens at brick and mortar stores, France-based Ingenico said in a press release.
Based on patented technology from Belgian startup Luckycycle, Ingenico is marketing the tool as a way for merchants to offer a 1 in 10 chance for consumers to win specific merchandise or the entire basket of items if they play and win. Merchants may customize the parameters of the game with various visuals and options.
A pedestrian passes in front of JPMorgan Chase & Co. signage outside a bank branch in Miami Beach, Florida, U.S., on Wednesday, Jan. 11, 2017. JPMorgan Chase & Co. is scheduled to release earnings figures on January 13. Photographer Scott McIntyre/Bloomberg
Chase Pay's next phase
Chase Pay is the result of years of investment in ChaseNet, a closed-loop system that allows JPMorgan Chase to cut costs in a way few other banks could. By contrast, the Merchant Customer Exchange's CurrentC wallet also had years of investment but failed to make it out of pilot.
Simply put, the two wallets were focused on different missions. Chase Pay is built on a unique platform but leaves it up to merchants how to package the service. CurrentC is that package, built from the ground up with the interests of merchants at the forefront, but with little to differentiate it on the back end.
"Chase had concluded that even though MCX was not going to introduce its own wallet, it had some really useful technology, with most of it having to do with loyalty applications," said Steve Mott, principal of BetterBuyDesign, a Stamford, Conn.-based consulting firm.
Chase Pay could get a further boost from the bank's $10 million investment in LevelUp, which plays to LevelUp's strength with smaller merchants.
In 2017 the creators adapted the technology into a touchless restaurant order-and-pay system that’s seen exponential demand during the pandemic, as dining establishments race to replace paper menus and card payment devices with contactless alternatives.
When the pandemic hit full-force and lockdowns closed many agent locations, the industry’s shift to digital accelerated quickly. Even as job losses rose among those sending money overseas, the demand from recipients kept money moving, including among legacy companies like Western Union and MoneyGram.
In addition to monitoring the spike in contactless payments because of the COVID-19 pandemic, Verizon Business has also cited the expected decrease in foot traffic at the largest malls in the U.S. through its mobile data metrics.
The Federal Reserve is facing pressure to allow retailers to route PIN-less debit-card purchases over their choice of networks. It’s a new stage in an old battle, fueled by the shift toward online shopping during the pandemic.
Companies like Affirm and Klarna have been a beacon for investors, leading to at least one multibillion-dollar planned IPO in support of a point-of-purchase lending model that could set the stage for use cases well beyond credit.