As mobile wallets mature, so will attempts to use the technology to marry payments and marketing, says Fiserv's Matt Wilcox.
"The mobile wallets that have been successful have been glorified card loyalty rewards programs. The Starbucks app is driving new behavior, for example. We're going to see a proliferation of those types of apps coming" in 2014, says Wilcox, who recently joined Fiserv to lead its digital payments marketing strategy and innovation.
Over the past year, more companies developed payments technology that is designed to be embedded with marketing. Zooz places a payments function directly inside mobile advertisements, while Koupah's mobile point of sale device uses advertising in its pricing structure. Other companies, such as PayPal, shopkick and Apple offer technology that ties payments and marketing to a user's location.
"Some marketing and payments programs are focused on using location rewards data, while others are using behavior data. In the next year you will see a consolidation of those types of technologies," Wilcox says.
Wilcox, who developed user experience technology for mobile banking during his 14 years at Zions, will work to find ways for Fiserv's clients to blend payments with other services. Card issuers can link mobile payments with mobile banking, offers, cross-sales and customer service, Wilcox says.
"Financial institutions are in an enviable position. They work with the merchants and with the client data, and in many cases the bank is the payment mechanism," Wilcox says.
These other models, such as the merchant-led Merchant Customer Exchange (MCX) wallet, can consolidate marketing programs to increase convenience for the user, says Preadeep Moudgal, director of emerging technologies for Mercator Advisory Group.
"The rewards and offers space is very confusing today because it's all over the board. There is so much information and so many different loyalty schemes that it is crying out for consolidation," Moudgal says.
Cooperative partnerships will be vital to the development of mobile payments, since it is unlikely one company can singlehandedly innovate on the marketing, payments, and processing pieces of the shopping experience, says David Andreadakis, vice president of loyalty strategy at Kobie Marketing.
Companies should look at how to get in "the middle of the value chain," says Andreadakis, who has worked on loyalty programs for clients such as Bank of America and Royal Bank of Canada. "You want to figure out how Google Glass, for example, will change the way people buy things and determine how your company fits into that change."
Consumers are becoming more receptive to using mobile to make transactions and to receive sales content. More than a third of consumers would be more likely to use their mobile device to make payments if offered rewards similar to credit cardsa percentage that jumps to 41% for consumers with six-figure yearly incomes, 48% for consumers under 35, and 50% for tablet owners, according to research from Vantiv.
These consumers also care more about the value of using mobile payments than the technology. "Consumers are not concerned about NFC or QR codes, but want to open an app that gives them value-adds in terms of rewards, tracking receipts and their purchases," says Lorena Harris, head of the Vantiv Insights research program.
The match between mobile advertising and payments is part of a broader trend called "showrooming," Harris says. Showrooming refers to the use of a mobile phone while shopping at a brick-and-mortar store to check prices of similar products at other stores. "People who are showrooming may share that info with friends on a social network, or even look at an item in a store, buy it on Amazon, and then go home," Harris says. Vantiv's research found that about 70% of consumers use their mobile phones while they are shopping.
Some of the emerging social payments technology such as shopkick's geolocation sensor and LevelUp's experimentation with Google Glass are aimed at rewarding in-store shopping, a trend that is likely to grow in the year ahead, Harris says.