CHICAGO – Mobile wallets are evolving in the key areas of availability and consumer awareness, but they continue to lack in the critical aspect of convincing users of their value, said Google executive Jack Connors.

The only way to take mobile wallets to a higher adoption level is to engage its users through more offers, opportunities to download helpful apps and  sending  reminders about what to do in order to increase loyalty rewards, Connors said Aug. 30 during the annual Mobile Payments Conference.

“Users want to be notified about offers that are about to expire,” said Connors, who heads Google’s merchant partnerships for Android Pay. “They also like the ability of the merchants to continually refresh the offers in their wallet.”

As such, mobile wallet development is increasingly joining at the hip with location-based marketing and technology that keeps track of consumer behavior and shopping habits.

As many as 63% of merchants are building payments into social platforms, while 22% already have beacon technology in place, whereas only 16% have Near Field Communication enabled at the point of sale terminals, said Asif Khan, head of the Location Based Marketing Association.

With that backdrop, it allows merchants to incorporate payments into a “three-layer location cake” to attract consumers  using mobile devices into physical locations, Khan said.

“The first step is to push a message to consumers to bring them to the store, the next is to increase basket size through WiFi or beacons,” Khan said. “Then you close the deal with NFC, payments and loyalty.”

Ultimately, the payment transactions deliver the critical data that merchants can integrate into enhancing the shopping experience, Khan added.

As mobile wallet adoption has remained slow, it is not a gloomy picture for those trying to advance the technology.

“It’s definitely happening  by us in San Francisco, but also outside of that area,” said Chester Ritchie, executive vice president of U.S. market for Israel-based payments technology provider  Zooz. “And it’s great because mobile wallets  provide better security and convenience.”

The rise in mobile wallet use will become increasingly apparent as consumers turn to mobile applications and, in turn, in-app payments, Ritchie said.

And it is only a matter of time before U.S. consumers catch on to what is happening in other parts of the world, Ritchie added. “You look at China and the WeChat app has 700 million users, and that app has payments built in.”

At some point in the near future, mobile wallet developers “won’t be asking how to get consumer adoption” because use of a mobile phone in an omnichannel experience will be more common, Ritchie said.

Still, the U.S. certainly lags behind other global markets. In analyzing current mobile markets, China is setting a standard for usage that others chase, said Evan Bakker, senior research analyst for BI Intelligence.

"In looking at a chart projecting this, we find that the U.S. is about nine years behind China [in mobile payment development]," Bakker said.

Merchants have not quite figured out how to convert mobile shoppers into making a payment with that phone, said Jim Ciortan, head of strategic retails sales at PayPal.

"Right now, there is about a 47% gap between those who use mobile to research while shopping to those who use mobile to spend dollars," Ciortan said.

For Google, it simply becomes a matter of helping merchants understand what Android Pay can do for them above and beyond having more consumers making mobile payments, Connors said. “The wallets that help merchants execute their mobile strategies will fare well,” he added.

Part of the Android Pay architecture is to allow banks and merchants to easily integrate their apps within the wallet, Connors said.

The industry will know mobile wallets have finally hit their stride when old-fashioned word of mouth kicks in --either by consumers talking to each other or communicating through social media ‑- because consumers tell each other that it is a reliable, easy and fast method for payment, Connors said.

“It becomes a wallet for everyone when they know they can tap it at a terminal and it will work, and that’s when it can become a habit ,” Connors said.

As for finding ways to show merchants  the benefits of accepting  a mobile wallet, Google recently experimented with a “mobile only” fast lane at a concert venue in California and it worked well, but it is a concept merchants likely aren’t ready to fully engage, Connors said.

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