Will retailer rejection put out Amazon Wallet’s fire?
Amazon has entered the offline mobile-payments space seeking to close the loop on merchant app downloads with a multi-merchant wallet, but retailers may shun the platform as Amazon has encroached on their profits before.
The biggest problem with mobile wallets or payments in general stems from the perception that they are actual solutions to consumer-facing experiences, when in reality their demand and use has remained mostly stagnant and persists as a pseudo-convenience in most applications. Standalone apps that embed payment into an individual merchant’s strategy for customer engagement have shown the most promise, which has led to increased sales and loyalty upon which category competition from Isis, Google and PayPal have not been able to compete.
“As technically superior as mobile wallets are, they struggle to be as simple and straightforward as the dumb piece of plastic that we fetch and swipe in a couple seconds. People just don’t see everyday payment as fundamentally broken,” said Sean Miller, senior vice president of strategy at Rokkan. “That’s not to say it can’t be designed better of course.
“With the Fire Phone and its Firefly feature, they’re showing really nice integration between real world products and their strong suit as a retailer. Getting people used to that behavior can help get them closer to the trusted payment moment.”
“The opportunity will be for Amazon to migrate their current user base by integrating Prime and other trusted features into the mobile payment offering. Can I buy something on the spot and have it shipped with Prime? Can I return something and have it credited to my Amazon Wallet balance? The challenge is for Amazon to transcend its roots as an online retailer and be trusted as a payment provider when I’m not online,” he said
Post launch, the point-of-sale app from Amazon allows merchants to scan a QR code or barcode to debit a gift card or reward a patron with loyalty credits after a user has uploaded the card information to the app. Consumers are also able to check the balances of their cards from a library of dozens of supported merchants.
The failing strategy of omnipresence
In addition to the mobile app, Amazon has created a complementing Website where users can add gift and membership cards to their account, which will appear in-app. Other payment methods can also be managed including credit cards, debit cards and checking accounts, though they can only be charged while shopping on Amazon.com and not at point-of-sale.
While the function comes preinstalled on Amazon’s new Fire Phone devices, acting currently as the enterprise’s rendition of Passbook, plans for expansion are imminent, as it has long targeted it Web-based customer base even when they engage in offline commerce. And with the Fire Phone’s ability to scan and identify physical products and match them with online inventory, Wallet may become the gateway to connecting Web and mobile services to in-store payments.
In the beginning of 2014, analysts were unsure of how Isis, Google and PayPal would evolve and foster a consumer adoption arms race, which they believed would see bloodshed predicated on the assumption that multi-merchant wallets would triumph.
The interesting fact though is that the biggest successor in the mobile payment space is by a singular application possessed by Starbucks, which the brand claims accounts for over 10 percent of all transactions and powers over more than 4 million purchases per week—double than its numbers only a year ago.
Chipotle, Jamba Juice and Five Guys have also witnessed a gracious fan embrace of their alternate payment offerings, which begs the question as to why consumers are downloading multiple merchant apps when they are able to manage their purchases into one.
The answer lies in the incentives that emanate from merchant-specific conveniences ad rewards that a Wallet cannot provide. The basis for these apps is not payments, but rather deeper brand identification and engagement. In light of this, the thought that a general-purpose application will come to dominate seems unlikely as this universal thinking has failed before with banking bill-pay and federated login, two examples which sought to roll various bill payments or passwords into one management system, but experienced low adoption as consumers still prefer to go directly to multiple portals to login or make payments.
It is obvious that less general-purpose solutions reign. Most merchants use a card-on-file model for in-app payments, which consumers have come to be familiarized and comfortable with, though not the most optimal execution from a payments industry perspective. However it has translated to driving repeat visits and increased basket size while payments players frantically are trying to perfect the tap-and-pay capability.
Mobile coupon books wins
Many individuals have regarded Target’s Cartwheel app as a wallet, since a shopper loads QR code-based incentives into their account to be redeemed at checkout. But it is not a wallet at all, and functions as a place to store and organize digital coupons, pushing users to buy items featured in weekly circulars.
Cartwheel couponing platform
While it has potential to become a true wallet if the brand decided to close the loop with its Red Card, for now it presents a useful and value-driven proposition that refreshes constantly for continual engagement.
Similar to Cartwheel, Wallaby is an app that focuses on growing and adding value to purchase incentives, by maximizing points earned based on cards a shopper most often uses.
While mobile wallets are seeking to tempt consumers towards ubiquitous purchasing, standalone apps are the ones truly identifying client pain points. Moreover, merchants are more commonly integrating their storefronts with beacons and geo-fencing developments which make merchants apps almost irrelevant, as a brand can be in the foreground regardless of how many applications a user has on their smartphone.
While the full flexibility of the Amazon Wallet is yet to be determined, it still remains questionable if there has to be a winner between mobile wallets and merchant apps, as the two can definitely co-exist.
“Amazon needs to find a way to bridge the trust people hold in their Amazon Prime checkout experience to other venues, outside of the gates of the Amazon garden,” said Wilson Kerr, vice president of business development and sales at Unbound Commerce, Boston. “They might find a way through ticketing or parking or another similar non-retail mobile payment opportunity, but asking another retailer to integrate with their system is going to be an uphill battle, at least today.”
“But retailers generally despise Amazon for their showrooming and margin busting pricing. So, unless Amazon is planning to open their own stores, I doubt retailers will be clamoring to adopt this payment option,” he said.
Michelle is editorial assistant on Mobile Commerce Daily, New York