Mobile Payments’ Next Step: The Loyalty Program

Payments and loyalty are becoming aligned on the mobile channel.

Anna Cox, PSCU director of credit union growth solutions in St. Petersburg, Florida, ran down the story so far, noting that there was a “great deal of discussion” in terms of how best to add loyalty programs to mobile payment platforms. The biggest hurdle so far is figuring out how to make everything fit together in a fashion that will not only make it useful for the customer, but also for the merchant.

Merchants are, understandably enough, concerned about bottom-line ramifications of such programs; it makes no sense to boost business if it costs more to get the new business than the new business would provide in cash.

But as put by Fiserv’s vice president for strategic marketing in digital channels and electronic payments Steve Shaw, loyalty programs not only make users more engaged, but also drive upsell possibilities, making it more likely that users will buy more, and users will also have a deeper connection.

Other problems are also afoot, including a fragmented mobile landscape. There are a lot of payment options out there right now, and backing the wrong horse, so to speak, could be disastrous.

Though with Apple Pay set to start accepting loyalty cards in the near future through the program directly, reports suggest that current Apple Pay users can link accounts to existing credit or debit cards that already have loyalty capability.

The idea of a loyalty program is sound enough. There’s no doubt that businesses want to reward loyal patrons and encourage them to become repeat business, a development many businesses depend on for long-term survival.

So offering a loyalty program, therefore, becomes a way to establish a further motivation for the customer to return. A customer who has a choice of two businesses that are largely equivalent may go one way or another depending on personal taste at that point.

But a customer with that same choice and a loyalty program offer at one is likely to go with the loyalty program thanks to the added inducement of “filling up the card” or “getting my last punch” or the like. That little extra shot of motivation can be important, particularly in a highly-competitive environment like retail.

Still, these are the early days of such things, and anything can change between now and the market’s nearly inevitable maturity. But for right now, loyalty programs are likely to be on a lot of minds, and getting these on mobile payment platforms will be a priority for some time to come.