What's in Your Mobile Wallet?

CSP conference attendees glimpse the future of payment and loyalty

CHANDLER, Ariz. -- It could happen before you realize it. Six years ago, cameras were scarce in cell phones--and app stores were nonexistent until as recently as early 2008. Now consumers can't imagine life without either of them.

During a panel at the CSP 2011 Consumer Insights & Engagement Forum, supplier and retailer attendees learned what's next in the pipeline for smartphone technology: mobile payment and marketing.

"Think of it as a way of digitizing your leather wallet," said Tony Sabetti, director of POS & Payment Terminal Alliances, at New York-based Isis, a mobile commerce venture between AT&T Mobility LLC, T-Mobile USA and Verizon.

Consumers currently are used to carrying around a wallet loaded with credit cards from different banks and merchants and many "pesky loyalty cards." They also might forget to bring coupons or gift cards on their shopping excursions. Now they can have the capabilities offered by all of those just by bringing their cell phone. "So you're integrating all this capability of payments, offers and loyalty so that when the consumer does that tap, they're transferring all that information in one shot."

That "tap" is enabled by NFC (near field communication technology), which allows two devices to work together. It's called "near field," because it's purposefully designed for the devices to be within centimeters of each other, so the use is deliberate.

While easy payments might be "the hook" of the technology, Sabetti said, "It's not about changing how payments are processed, it's really about changing how you as merchants communicate with customers."

He adds, "The part of it that makes it interesting for merchants and retailers is that you now have a channel through the digital wallets to communicate and send offers to consumers." Retailers, he said, can even "dial it down" to customers within their loyalty programs, certain geographies or certain profiles -- sending very specific offers. "It's about that personal relationship through the phone that you can leverage to motivate consumers to change behavior to buy more product, and to come into the store more often."

At Mountain View, Calif.-based Google, another goal of a mobile wallet is to close the loop of online and offline shopping, according to Serge Kassardjian, strategic partner development, mobile commerce at the company.

Historically, Google has driven intent to purchase on the Web with people searching for a keyword, looking for something to buy and then going to the Web page to buy it. That might not work so well, if say someone was hungry and wants to buy a taco, he said. "Generally, what we've historically done very, very well is generate traffic to Web sites with the intent to buy. Now we're going to be serving ads to generate foot traffic into the store with the intent to buy." Version 1.0 of Google Wallet was launched for the Sprint Nexus S 4G phone in five initial cities: New York City, Chicago, San Francisco, Los Angeles and Washington, D.C. in October 2011. It currently has 20 merchant participants including Subway, Walgreen's and Macy's.

And while the two companies work with different mobile carriers, both say that having an open platform is important. "We don't know where Google Wallet will be five years from now, but we know that the ecosystem of merchants, startups, everyone who wants to play with the point of sale will be embedded into Google Wallet in some way," Kassardjian said.

Sabetti said, "Carriers that operate us and the merchants that operate us were very specific, they're expecting this to be an open platform and they're expecting it to be extremely portable. There is no value in going to market with a payment solution that appeals to 15% of the U.S. population."

He added, "I think what Isis and Google are doing is really evangelizing an ecosystem around NFC payments. And we're aligned in our vision; we're aligned in our core technology." He adds that retailers won't be forced into a beta vs. VHS type of choice, and will simply be a matter of putting one device out on the counter, which retailers may even already have. "You don't have to make that choice, you just have to decide to move forward with NFC payments, and we all work with the same partners, and are going to make sure you can use any of the wallets."

As Richard Browne, marketing vice president, North America, of Greensboro, N.C.-based Gilbarco Veeder-Root, sponsors of the session, points out: "Mobile is going to transform a lot of the way people shop over the next five years, and our purpose in presenting that was to make the industry aware of the new developments in mobile and the emergence of the mobile wallet. As retailers build out their loyalty programs, they need to be thinking about how this is going to impact them. … The technology exists now; we think we'll see deployments ramping up in 2012."

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