Targeting Your Next-Generation Wallet
The mobile wallet has been a solution in search of a problem for a number of years now. The promise of integrating payment and marketing tools into a portable digital device (namely the cell phone) is as obvious as it has been elusive. If digital marketing can be tied more directly to actual point of sale, then marketers can close the loop on measuring ROI in ways never before possible. The payoffs for ad impressions, loyalty programs, offers-based programs, etc. all can be tied to purchase. The implications for media attribution, consumer behavioral data and just about everything else in the media value chain are enormous.
While mobile wallets have been a dream of marketers, they have not been able to demonstrate the necessary value for two key constituencies, consumers and merchants. For the end user, mobile payments and wallets don’t solve much of anything, since pulling out a cell phone is not much better than pulling out a credit card or a loyalty card.
And what is in it for the payment chain? As Alistair Goodman, CEO of geo-located mobile solutions provider Placecast explains it, “There has been a realization in the mobile wallet space that there is not a lot of new revenue to be generated by the transactions because that is a very efficient channel and all the players are quite optimized.” There is also not a lot of incentive for merchants to get with a program that merely shifts the method of payments consumers will be using anyway.
As it has taken much longer for the mobile wallet idea to take hold than many had hoped, it is clearer now that the infrastructure has to add some value to a transaction method so that it benefits consumer and retailer. This may be where location-aware offers come in. Goodman’s Placecast has been developing over the years on a ShopAlerts product that uses geo-fencing to alert opted-in users of offers available at their favorite retailers. As the consumer approaches a geo-fenced area (close to the relevant mall or retail outlet), she can receive push messaging and offers from the chosen retailer. In my testing of the system, the model is not the geo-triggered nightmare many have presumed push geo-targeting would be. The user is not assaulted with unwelcome coffee shop promos as she walks down a street. Users select their favorite retailers, who maintain restraint in using a system that could easily be overused.
In a new effort, Placecast has turned its ShopAlert system into an HTML5-based white label wallet that carriers, credit card companies and retailers now can incorporate into their own solutions or brand for themselves. The idea here is that geo-located offers can be ties to a mobile wallet and payment system provided by these partners. In the demo I saw, the consumer can either do a pull-based search of a given area for offers or select from a series of product categories to have geo-fenced offers pushed to them when they enter relevant zones.
“The way to think about it first and foremost is as an API framework to do geo-fencing,“ says Goodman. “It delivers offers to an in-box, allows searching for offers nearby and can track redemptions and expiring offers.” The system can be linked to loyalty programs, credit cards, and a range of payment systems. This doesn’t require the often overhyped NFC tap-to-pay infrastructure, but it can use that payment system when available. Placecast is not providing the payment or security piece of the equation (that is up to the first parties), but it is linking the offers to payments to add value to the transactional piece of m-payments.
Goodman, whose Placecast platform has been in operation globally for several years, has been watching the mobile wallet space evolve and crafted a solution that seems to place its bets more directly on the carriers, credit card companies and retailers than on the operating system vendors like Apple and Google. Google, of course, has its NFC-powered Wallet, which has foundered since its launch. And Apple has announced a new Passbook app for iOS that will consolidate offers and loyalty cards in a single place but is not tied (yet) to a payment solution.
Goodman is not convinced that Apple and Google will rule the space as much as the brands that have already established trusted financial relationships with consumers. “It is not at all clear yet who will win the mobile wallet wars,” he says. “It is our view that partners in the mobile operator and credit card space have a strong advantage because they have strong relationships. The consumer does not want 20 mobile wallets. It will be a matter of who will provide the most value and added services.”
And it is a matter of how consumer habits evolve around these new payment and offers systems. Worldwide movement towards mobilized payments has been varied according to region. Even before smartphones, Asian markets were much quicker than most to embrace the idea of a mobilized payment system. In Europe, the carrier O2 has already rolled out m-payments in the U.. and is actively studying how consumers will respond to the opportunity.
The U.S. market has been stymied somewhat by a preoccupation with NFC and too many in the market seeing to wait upon the seeming wizardry of waving a cell phone in front of a POS terminal to make a payment. The growing presence of alternatives like PayPal and others fueled by mobile startups seems to be convincing more companies that they don’t have to wait for NFC-equipped phones to make an m-payment ecosystem real. The technology and standards have been available for more than five years now. Even if NFC phones started appearing in great numbers, this minute it would take years before hardware upgrade cycles would allow a critical mass.
Whether a great number of consumers will want geo-located offers, let along push messaging triggered by their location is still an open question. In its years of operation Placecast has amassed 10 million active users, and Goodman insists that now he is starting to see the carriers and credit card companies embrace the idea of location-based offering mechanisms. But the time is ripe for retailers and all of the mobile players to start experimenting in this space. If mobile media has proven anything it is that consumers are driving the trends and are using the technology in ways that many never anticipated. The industry is in a persistent catch-up mode trying to geo-locate where the mobile consumer wants and needs the infrastructure to be next.