Panel Debates Mobile Wallets
By Pan Demetrakakes
Mobile wallets will dominate retailing in the coming years, but not until some fundamental issues about utility, technology and system ownership are settled, according to a panel discussion at the recent R2 Retail Reinvention Conference.
The six panelists, in a discussion held Aug. 5 at McCormick Place in Chicago, included representatives from Google, Samsung and PayPal. They discussed issues including how to motivate consumers to use mobile wallets, how to get retailers to accept them, and even the basic purpose and functions of a mobile wallet.
The discussion was preceded by a presentation from one of the panelists, Jared Schreiber, CEO of InfoScout, a provider of apps that service shoppers based on scans of their purchase receipts. InfoScout surveyed iPhone 6 users about their use of Apple Pay, and Schreiber presented some sobering statistics suggesting that the payment system, introduced in September 2014, is failing to gain traction:
• As of last March, only 15 percent of iPhone 6 users had ever used Apple Pay; by June, that number had dropped to 13 percent.
• When those who had used Apple Pay were asked if they had used it for a particular, randomly selected transaction that they had scanned to InfoScout, 39 percent in March said yes; by June, that number had dropped to 23 percent.
• When a list of motivations for buying an iPhone 6 was presented, the most popular choice was “larger screen.” The ability to use Apple Pay was dead last, at 1 percent.
The takeaway for many of the panelists was that most consumers are not motivated to use Apple Pay, or any other phone-based payment system, because it’s not really much more of a convenience.
“When I hear the results here for Apple Pay, it’s not very surprising to me, because while the ecosystem is catching up...it’s still just as easy to pull out your credit card or cash to pay,” said Sherice Torres, marketing director for Android Pay, the payment system that Google launched in late May to compete with Apple Pay (and supplant Google Wallet).
Chris Gardner, co-founder of Paydiant, an app-enhancing payment system run by PayPal, said it’s up to retailers to provide motivations to use phone-based payments. This can happen if they use the computing power of smartphones to advance their marketing efforts.
“It’s going to take more than just payments to effect a behavioral change,” Gardner said. “Apple Pay, it’s just a payment, it’s just a card swipe, the same transaction rate—it’s no different than swiping a card for a consumer. When you start to roll some of the other capabilities into that mix, things like marketing offers and loyalty and all that stuff, I think you’ll see a lot more engagement.”
For retailers to provide motivations for mobile payments to consumers, they must be motivated themselves, said Seth Priebatsch, “chief ninja” of payment app LevelUp. That lies well within current technical capabilities, he said.
“The combination of convincing retailers to get something of value in relationship to mobile [payment]—data-trackable advertising—and giving some portion of that back to the consumer—loyalty rewards—is not a thing that we will struggle to adapt,” Priebatsch said.
Will Graylin, co-general manager of Samsung Pay and CEO of its LoopPay mobile payment system, said retailers aren’t interested in mobile wallets that would require them to replace or make expensive upgrades to their point of sale systems.
“Many [retailers] are saying, ‘Look, if you need me to touch anything, come back next year,’” Graylin said. “The good news about a wallet solution that does not require them to make changes is that they automatically participate.”
Those considerations led to a discussion about whether mobile payment systems are more logically based in payment systems that can be used across the retail sector, or in apps belonging to individual retailers. Several panelists noted that one of the most successful early payment apps was Starbucks’. The implication is that retailers who control a payment system are in the best position to tailor it to whatever they want to offer their customers.
Priebatsch, however, predicted that as generic wallet systems take hold, they will incorporate the most appealing features of individual retailers’ apps. “The mobile wallets that exist will look at retail experiences that are good point solutions, and eat up the important points and integrate them,” he said.