Mobile 2 Go Blog: Upsetting the Apple Cart
The viability of iconic credit card brands in a mobile world
OAKBROOK TERRACE, Ill. -- Among the many things the concept of mobile payment may do is upset the apple cart of the current credit card, debit card, gift card and loyalty reward system.
I was speaking with Patricia Hewitt for CSP magazine's upcoming cover story on mobile payment. She's the vice president and managing director of consulting services for Mercator Advisory Group, a Boston-based research firm, and author of a study examining the major credit cards and emerging mobile wallets.
She thinks the threat to existing iconic brands is huge. Today, major credit cards have a strong grip on the consumer psyche, with their logos prominent on registers and store doors. But as mobile wallets pull together multiple payment brands into a single space, those iconic payment brands become secondary to the larger wallet's identity.
"The credit card may still fund the transaction, but that brand is subordinate," Hewitt said. "That's important because it begins to eat into the real estate at the point of sale. Customers are no longer looking for the [credit card] logo."
If the mobile-wallet brands take over, then they can use their own incentives to steal mindshare and transaction volumes, Hewitt said. Eventually, the mobile wallet could switch the user to their own methods of payment, bypassing credit cards altogether.
Merchants may commandeer some of that opportunity, she added, naming Seattle-based Starbucks as the one example. "I mention Starbucks because of their ability to create a frictionless payment experience which in turn, has resulted in their being able to generate over 11% of their in-store sales in the U.S. and Canada from their mobile application. This speaks to the problem that mobile payments have had, that of making the application operate as efficiently as a card swipe."
That said, retailers on the whole face an uphill battle in that, as Hewitt noted, customers trust financial institutions, banks and the credit-card companies to handle their money. But as online and mobile begin to merge, those loyalties will blur, paving fresh roadway for mobile wallets and potentially even merchants themselves. "Customers will see more of a direct value in a merchant-reward loyalty payment," Hewitt said. "I'm not dependent on the [card] issuer reward."
For more on mobile and its potential to alter the shopping experience, look to CSP magazine's February's cover story.