CHICAGO — Geolocation is the answer to mobile wallets' adoption conundrum, but even though the tech already exists in most smartphones there's a steep learning curve for payment providers, acquirers, retailers and consumers.

In the meantime, mobile payment adoption remains a significant hill to climb in the U.S.

"What is amazing to me is the slow adoption of the mobile wallets in the two primary operating systems of Apple Pay and Android Pay," said John Duffy, founder and CEO of 3Cinteractive, a company specializing in digital communication with consumers. "The functionality and tools available in the most valuable real estate in the world, the home screen of the smartphone, are underutilized."

Bloomberg News
Bloomberg News

When retailers run tests in which coupon offers are delivered directly to the Apple Pay or Android Pay mobile wallet, rather than as a simple text notification, the redemption potential sky rockets 300%, Duffy said this week during the annual Mobile Payments Conference.

"But we don't see a lot of support from our clients to use these tools," Duffy added.

Apple's recent revelation that a blue bar on an iPhone screen will soon indicate when an app is engaging in geolocation is being considered by those in location-based marketing as an opportunity for retailers to provide information at that time to consumers about the value being gained through the technology, as opposed to leaving the consumer uncertain and even afraid of losing privacy.

It actually represents a small step, one that could lead to more meaningful location-awareness interactions through the wallet.

"If a customer walks into a store with a coupon in Apple Pay that expired two weeks ago, the retailer should have the ability to see that and offer a newer, better coupon at that moment," Duffy said. "It's an inexpensive way to communicate with a consumer."

Retailers have to get comfortable with the notion that they would be sharing their customer data with other companies and with technology providers to drive communication at a higher level. It's a different mindset than traditional retailing, but one that speaks to the fact that smartphones are becoming a vital part of daily life and will be the conduit to drive customer traffic and transactions.

"Mobile location data, in terms of mobile payments, is now mostly leveraged to validate that a user is where he says he is," said Brian Handly, CEO of Reveal Mobile, a location data management company. "But there is a big opportunity to get a much deeper understanding of a user based on that location history."

Major industries like the airlines are beginning to test the power of location-based data and services to provide far better experiences for customers in a terminal, especially if a flight is delayed.

United Airlines has been testing beacons in a few different hubs they operate, in combining the data with those who have the United app on their phones, said Asif R. Khan, founder and president of the Location Based Marketing Association.

"It combines where you are with real-time feeds from the flight management system, but it also provides maps of the terminal as to where retail properties and restaurants are located," Khan said.

This allows United to enhance the customer experience for those who may have a two- to three-hour flight delay because the app would direct that customer to a restaurant or retail site and remind them they can pay with their United points, Khan added.

Retailers continue to attempt to connect all of the dots with location-based marketing tools as they relate to interactions with payments and mobile wallets.

They have text notifications to lure a customer into a store, and beacon technology to update offers in the store, but they still experience a "gap" in the last layer in getting all of that location data to integrate with the point-of-sale terminals or the loyalty program apps, Khan said.

"But our research indicates that by the end of 2018 or early next year, we will see some of this resolved and big adoption of the native wallet in these devices with the ability to see if an offer to a customer was used and what wallet it was done with," Khan said.

In the meantime, retailers could do themselves a big favor if they want to support more mobile wallet interaction simply by having signs at the POS indicating which wallets they accept, said Chris D'Souza, business development director at LiveRamp, an identity resolution provider.

"There is an education problem at the point of sale, because I see so many people who do not even realize they could pay with their phone because there is no sign at the POS and they may not know what the icon (for contactless payments) looks like," D'Souza said.

Some of the indifference on behalf of retailers may stem from not understanding that they likely have much of the information they need to start driving more digital payments, Souza added.

"Retailers can obtain customer information from point-of-sale data, from the customer relationship management data on a loyalty card, and from some location-based data," he said. "But a lot of these signals are stored in their individual silos and you can't do much with that if you don't understand how your customer interacts with the silos."

LiveRamp delivers a privacy compliant identifier that can basically link all of these different silos and tie together a unified vision of the customer wherever they may go, Souza added. "It can drive more loyalty, more traffic and more transactions."

And it sets the foundation for the credo on which most mobile payments initiatives will live or die.

"The customers will decide," 3Cinteractive's Duffy said. "When we're solving a big enough problem and providing some level of convenience and value —and the customers demand it — I think we will all come in line behind it."


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