Mobile has become a serious battleground for securing user loyalty among quick-service food and drink vendors. While the branded app has produced mixed success for most companies, the routinized nature of coffee, burger, and donut buying maps perfectly with the format. And it is in these places, these loyal relationships, where tools like mobile payments make at least some sense. M-payments otherwise represent the classic solution in search of a problem. Whipping out and swiping a credit card is not a pain point for which whipping out a smartphone, tapping, hunting for an app and then going through a multi-step process seems a salve to most sentient beings.
But when you can take only a touch of friction from a daily process, add incremental value to the user via loyalty points and advance ordering, the m-payments make enough sense so a percentage of customers will try it. Starbucks has proven as much. Its morning rivals see the opportunity.
Burger King will introduce mobile payments for all of its over 7,000 locations in the next couple of months, according to a report at Bloomberg.com. The model will work much like Starbucks’ virtual card system where customers load their account with funds to be debited for the transaction. The company will build into the app incentives like discounts as well as push to users nutrition information. Advance ordering for pickup may be part of the final package as well.
The report suggests that these mobile payment schemes from the QSR category are aimed at Millennials who somehow are eager to port as many functions as possible to their cell phone. McDonald’s has been testing mobile payments and Dunkin' Donuts has a rewards program. My 21-year-old daughter tells me she uses her Dunkin' app every day and makes sure it is on her first page of iPhone icons.
I have to admit that I have become reticent about reporting these incremental advances in mobile payments, precisely because I am not sure they are incremental advances in mobile payments as a practice. Sure, there is a certain habituation going on as people become accustomed to packing more functionality onto their devices. And the opportunity for deeper, more intimate marketing at, and up to, the point of sale arise from this. But I am not as sure that all of these point solutions focused on individual brands add up to a more comprehensive m-payment ecosystem. They don’t need to do this, of course. Their value may lie simply in getting the individual brand closer to the customer. The data these apps cast off will be invaluable to understanding paths to purchase and signals for shifting taste.
But if anything, these branded app solutions point to how much the individual merchants covet the direct and unmediated relationship to the consumer. If anything, that may impede the evolution of a universal m-payment solution, in part because the merchants may not want to share the relationship and the data. You still need some uber-brand (credit card, carrier, sexy startup?) to convince both consumer and merchant that all of these branded solutions can be aggregated effectively and to everyone’s satisfaction. Having a wallet full of loyalty cards has proven to be a real problem in search of a solution. Yet a universal physical loyalty card never emerged to fix it. The smartphone app deck may be enough of a solution for most of us simply because it thins the wallet. So if all the most important, routinized daily purchasing habits are going to be ported to my phone, does that create a momentum for bringing all other credit card purchases there too? Maybe. But even if it does, will this be a mobilized credit card or some larger wallet that aggregates brands and functionality? None of us knows, of course, because the answer comes from behaviors we haven’t seen yet.
The fixation in this industry on mobile payment is misplaced, I think. In my experience so far with retail apps, the one that has proven most valuable to me and my wife still makes us swipe a credit card after having virtualized all other pieces of the transaction. The Giant grocery store Scan It! app allows us to scan goods as we pick them off the shelves and not have to re-scan and bag at the checkout. We still have to swipe our credit card at checkout, and it would be nice if the app virtualized this last piece too. But the value comes during the shopping process. It saves us a step and at the same time pushes personalized offers and product info at every other step. I am not sure why so much of the mobile press is fixated on the payments piece. Yes -- it is important to the financial industry and to mobile startups that fantasize about getting a hunk of that payments market. But I think it is trivial when it comes to the consumer experience, and even a distraction from the places where mobile devices can genuinely enhance and streamline the shopping experience itself.
I think you address all of the most relevant points regarding the value of mobile payments -- whether they really incrementally evolve consumer habits, let alone transform it. Nice thinking on this.
To me, it's an absolute no-brainer however because of the sum total of benefits:
If you can take advantage of a) Millennials' predisposition to be mobile, b) The stored-value approach to letting them make these payments, c) Being one step closer to intimacy with a subset of consumers via an app on their smartphones, d) The transactional guest data you'll gain and the targeted marketing that can follow as a result, and e) The free PR this initial wave of digital first movers in the restaurant industry is getting...
...why not make the move? I don't see it as a fixation with mobile payments as much as a fixation to speed up the experience and leverage technology as the opportunities present themselves.