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Enabling mobile wallets will enhance all-around business

June 27, 2014


Mobile wallet systems in China are thriving

China’s ecommerce sectors continue to show that mobile wallet systems can be successful, according to new data from Forrester Research.

While digital wallets have been established in China for some time, businesses in other countries can also find success by evaluating the needs of consumers and options within the marketplace to formulate a similar strategy. As the country’s ecommerce continues to boom, research points to the unique characteristics of China’s mobile payment system.

“I see mobile wallet usage as being universal,” said Mark Tack, vice president of marketing at Vibes, Chicago. “From using mobile wallet as a ticketing option for sports, shows and events to leveraging mobile coupons to drive people in store, there is so much international marketers could be doing to weave mobile wallet into their marketing mix.”

“Smartphone adoption is only increasing internationally; it’s time for marketers in tech-fluent regions like Europe and Asia to really evaluate the power of mobile wallets for their consumers,” he said.

Mr. Tack is not affiliated with Forrester but agreed to comment as an industry expert.

Forrester did not comment by press deadline.

Digitally inclined
Given China’s growing ecommerce market, the development of smartphone penetration and mobile payment technologies, digital wallets have become a convenient payment option.

There have been constant promotional efforts by ecommerce companies Alibaba and Tencent, financial institutions and mobile operators, which all play important roles in encouraging the implementation of digital wallets through their online platforms.

China’s Central Bank policies determine the market access of third-party payments, but by unifying mobile payment standards, the Central Bank improves compatibility of digital wallets offered by the different players, which directly lowers the cost of adopting these systems.

Merchants should choose the best digital wallet option for their business by considering both ROI and how consumers will use and benefit from the mobile wallet system. The implemented system should simplify the payment process for the consumer rather than making it more difficult.

Three types of digital wallets exist within the marketplace, such as remote-only digital wallets, proximity-only digital wallets and omni-channel digital wallets.

China’s recent struggles
In March, the People’s Bank of China suspended the use of QR codes and virtual credit cards for mobile payments, adding new stumbling blocks to Tencent Holdings and Alibaba Group’s efforts in mobile.

According to an article in The Wall Street Journal last week, China’s central bank decided to suspend mobile payments through QR codes and virtual credit cards until the company can figure out the security and technology involved. This could have a huge impact on companies such as Tencent and Alibaba, which are trying to make a bigger play in mobile payments in China (see story).

Yet, while mobile-enabled contactless payments have been lagging, this circumstance is expected to change, with more than 50 percent of wallets in developed markets – and more than a third globally – expected to rely on contactless technology by 2018, according to a new report from Juniper Research.

Mobile wallets leveraging near field communications technology were first out of the gate on the contactless front but have been slow to gain adoption by retailers and consumers. However, mobile contactless payments are expected to get a boost from Apple’s anticipated launch of a wallet as well as the introduction late last year of Host Card Emulation technology, which is helping to make NFC more widely available (see story).

Vibes’ Mr. Tack discussed a few implementations that could make digital wallets more useful among merchants and their consumers.

“Think about the important pillars of mobile, because they all apply to mobile wallet, such as time, location and interaction,” Mr. Tack said. “Leverage mobile wallet as a timely communication tool to remind consumers of the offers and loyalty cards they have saved on their phones.”

“Make all of your mobile wallet content location-sensitive, prompting them to take action when they’re near your store with a gentle, triggered reminder. Use mobile wallet to deep link to websites, post-tap consumer engagement opportunities and more.

“Both Apple’s Passbook & Google Wallet content allow you to link, so use mobile wallet as an interaction tool, driving deeper customer engagement and utility to your existing marketing programs.”

Final Take
Caitlyn Bohannon, editorial assistant for Mobile Commerce Daily, New York

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