It’s all about convenience these days. Mobile technology is now an indispensable part of almost 2 billion of us around the world. This technology has been leveraged to make our lives easier by helping us shop, pay bills, transfer funds, and now – stash our cash in Mobile wallets. Mobile wallet apps allow you to save your card (credit/debit) information securely which you can then use to shop, pay bills, buy movie tickets and much more. Most mobile wallet apps also offer their customers with vouchers, coupons, loyalty cards, etc. coz that’s what people love – getting rewards! Which in turn leads to very happy customers. Statistics show that by the end of 2017, there will be sales of $60 billion via mobile payments.

For the history junkies

Google was the first to introduce Google Wallet back in 2011 where using a mobile phone one could make payments, redeem coupons and earn loyalty points using the NFC (Near field communication) technology. However, now Google has replaced Google wallet with Android pay and has made it compatible with 70% android devices.

During the launch of iPhone 6, Apple Inc. launched its mobile wallet app for iOS devices called Apple Pay which was first available only in the US but now also available in UK and China. Apple also announced an API that app developers can use to build Apple pay checkout in their apps.

Customer engagement

Many retailers like Dunkin’ Donuts and Starbucks have developed their own mobile wallet apps which not only lets their customers pay easily via their mobile phones but also offers valuable perks like coupons, reward programs, mobile order-ahead, etc. According to BI Intelligence reports, retailer mobile wallets are leading the overall mobile wallets industry even though universal mobile wallets like Android Pay, Apple pay and Samsung Pay can be used at multiple retail outlets.

China’s leading digital payment giants like Alipay and WeChat, go way beyond just a mobile wallet that stores your card details and make payments. Paytm in India is also catching up in customer engagement by offering a whole e-commerce store and a platform where you can make your bill payments and even buy flight tickets. You can also pay for your goods at Paytm compliant stores spread all over India by just scanning a QR code.

All I’m trying to say is that it is extremely important to provide your customers with more than just a way to store and pay using their mobile phones if you want your customers to come back to you again and again.

Kinds of Mobile wallets

We can broadly classify mobile wallets into three categories-

  • Open loop Wallets – These are mobile wallets issued by the bank and is connected to your personal account. You don’t need to top up your account as soon as you run out of e-money.
  • Semi-closed loop Wallets – Mobile wallets like Paytm is a good example of a semi-closed loop wallet where it allows you to shop at stores that have tied up with them and also allows to make some financial transactions at locations listed by them.
  • Closed loop Wallets – Closed loop wallets payment system works like a gift card. You need to top up your wallet every time you make a purchase and use up all your money. Mobile wallets used by retailers and other loyalty solutions, are closed loop payment systems. For example, Flipkart, Starbucks, Makemytrip, etc., offer this kind of a wallet where you can refill your wallet with your card and make payments only to that specific company. And No, you cannot use that e-money any place else or withdraw that cash-back you got from flying to New York and back.

Security Concerns

According to a survey, about 50% of respondents said that they do not use mobile wallets because security can be breached if they lost their phones or their devices being hacked. However, majority of the payment systems make use of multiple layers of security even for in-store transactions. Methods like Tokenization, encryption, sandboxing of applications, strong authentication and authorization, etc. are used to secure all transactions via a mobile wallet.

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