Tuesday , October 23, 2018

Mobile Wallets Team Up With Networks, Issuers, and Merchants for Consumer Attention

The holiday shopping season may be coming to a close, but mashups between mobile-wallet providers, merchants, payment card networks, and card issuers are likely to continue indefinitely as all groups seek more transaction volume from consumers.

Apple Inc. has been active this holiday season. In one promotion, Apple is offering a $5 gift card good at its App Store and iTunes site when the recipient pays with Apple Pay while shopping at 19 merchant partners from Dec. 14 through 21. Participating merchants include 1-800-Flowers.com, Warby Parker, JCPenney, Macy’s, and Kenneth Cole.

Another major wallet provider, Samsung Electronics Co. Ltd. with its Samsung Pay, “has taken a unique approach with Samsung Rewards,” says Jordan McKee, principal analyst, payments, at 451 Research LLC in Boston. “Essentially, the more you use Samsung Pay the more points you build up, which can be used to obtain Samsung products.”

But most of the recent wallet promotions have been led by card issuers or payment networks, not the mobile-wallet providers themselves, according to Jordan. For example, Discover Financial Services “has offered as much as 10% cash back for Apple Pay transactions,” says McKee. “The intent is to drive top-of-wallet with the hope that users will set-and-forget that card, using it for future Apple Pay transactions after the promotion has ended.”

McKee adds that Visa Inc. and Mastercard Inc. frequently offer percentage-based discounts at certain merchants for using their respective Visa Checkout and Masterpass wallets. The goal is “to drive consumer familiarity and habituation,” says McKee.

In an unusual issuer-led promotion, JPMorgan Chase & Co., the nation’s largest credit card issuer and provider of the Chase Pay wallet, announced last week that holders of its Chase Freedom card will be able to earn 5% cash back on up to $1,500 in combined volume for certain Freedom Card-funded purchases not only through Chase Pay, but also with Apple Pay, Samsung Pay, and Alphabet Inc.’s Android Pay.

“We want Chase Freedom cardmembers to try—and enjoy—the convenience of mobile wallets,” BJ Mahoney, general manager of Chase Freedom, said in a news release. “They can maximize their rewards not only by paying for necessities, but also by splurging, like for their favorite coffee, when using a mobile wallet.”

The promotion will run in 2018’s first quarter. Chase Freedom provides a 1% cash reward on all purchases, but the promotion adds an extra 4% for purchases at gas stations and with Internet, cable, and telephone providers, including AT&T, Verizon, Spotify, Hulu, and Netflix.

According to 451 Research, PayPal Holdings Inc. is the nation’s leading digital-wallet provider by usage—some 67.5% of consumers responding to 451’s third-quarter Voice of the Connected User Landscape survey reported they had used the PayPal digital wallet for a purchase within the previous 90 days. Respondents could check off as many of the 15 wallets listed, and “other,” as they had used. Apple Pay came in second at 24.2%.

Android Pay and the private-label Starbucks Corp. mobile wallet tied for third at 15% apiece, immediately followed by Visa Checkout, 11%; Chase Pay, 7.7%, and Samsung Pay, 6.7%.

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