The Moral Wallet: Striking the Right Balance With End Users

Sirpa Nordlund, Executive Director, Mobey Forum

Even though studies are showing that an increasing number of users are giving the mobile wallet technology a try, only a few are reported to be using it on a continuous basis. Consumers say their top two reasons for not regularly using their mobile wallet are either that they forget to do so (the question of value) or that they are uncertain as to which merchants will accept the payment.

Value added services, ‘VAS’ for short, have been widely held as the enabling force that will drive mass market adoption of mobile payments and mobile wallets. It isn’t hard to see why. After all, who doesn’t like bagging a bargain?

As far back as 2010, Mobey Forum has been theorising about VAS. What services would be the most attractive? What form would they take? How would they be integrated with the mobile wallet and, crucially, what role could they play in helping banks and other mobile payment service providers establish a point of difference in a contested and fragmented market?

Fast forward to 2016 and mobile wallets and their services are developing largely as anticipated: the user accumulates value, generated over time through repeat payments, which can be redeemed in a related form, usually at a time of the user’s choosing.

But something is nagging me. Something that hasn’t yet been discussed. 

As the years go by and NFC-enabled devices filter through to the mass market, the mobile payments user demographic is diversifying. What began with a select few affluent, financially astute and mobile tech-savvy early adopters, now encompasses those challenged by their finances, including those that struggle with credit-related problems, often due to rising living costs, unemployment or, notably, poor financial management.  And then, of course, there is everyone in between.

First of all, the words ‘value added services’: whose perspective do they reflect? Do they really mean what they should mean? To whom are they adding value? Who are they designed to serve? What should they achieve?

For those providing the payment service, the answers are fairly clear: More customers, more customer data. Increasingly targeted marketing and product development. More purchases. Increased revenue.

But on the other side, what’s in it for the customer? The opportunity to obtain a discount, of course.

Perhaps we should be talking in terms of incentives, instead. What are the various types of incentives being deployed to encourage regular use of mobile wallets?

Firstly, there are financial incentives, which provide users with a cash-back deal when they use their mobile wallet for payment, instead of a plastic card or cash. Then, there are product or service incentives: Android Pay has introduced the Tap10-promotion, for example, which offers consumers a free song for every tap&pay transaction performed. Elsewhere, Chase offers consumers a free album download to users that enroll their cards with Apple Pay.

For me, however, a far more thrilling incentive a bank could offer would be to take a completely different look at the scene to the retailers. Instead of encouraging consumers to spend, spend, spend, they could instead incentivise them to save, save, save. After all, the freedom generated by increasing one’s savings is arguably a far bigger incentive than a ‘free lunch’ triggered by the purchase of a certain number of goods or services. One could even foresee a situation where banks are giving their mobile wallet customers a saving incentive to help them fulfil their true dreams (and not just the dreams of retailers).

Getting customers to love their bank

There are already several fintechs offering money management services to consumers. Mobile wallet usage and VAS could similarly be used to promote sound financial management, potentially to a wider audience. Then, at the same time, the bank would position themselves as being on the side of their customers, protecting them from frittering away their hard-earned money, and instead encouraging savings and investments via regular use of their banking app.

I’d like to see VAS providers follow this lead. Executed sensitively, I believe customers would respond favourably. Many banks already have reputational issues relating to trust, so is it wise to issue VAS that solely encourage customers to spend? It doesn’t feel like the most effective way to win them over.

Perhaps VAS could be designed to reward savings deposits instead (‘interest’ for the mobile age). Maybe mobile money management services could be ‘unlocked’ within the wallet, just like in-app purchases, to reward daily balance checks or the regular viewing of transaction histories. Perhaps loyalty points could be gifted to those that successfully clear their credit card each month.

The mobile wallet is shaping up to be a hugely powerful customer interface. For banks with the creative vision to think a little differently, VAS could be a golden opportunity to demonstrate that they really are on the side of their customers.

Sirpa Nordlund, Executive Director, Mobey Forum

Even though studies are showing that an increasing number of users are giving the mobile wallet technology a try, only a few are reported to be using it on a continuous basis. Consumers say their top two reasons for not regularly using their mobile wallet are either that they forget to do so (the question of value) or that they are uncertain as to which merchants will accept the payment.

Value added services, ‘VAS’ for short, have been widely held as the enabling force that will drive mass market adoption of mobile payments and mobile wallets. It isn’t hard to see why. After all, who doesn’t like bagging a bargain?

As far back as 2010, Mobey Forum has been theorising about VAS. What services would be the most attractive? What form would they take? How would they be integrated with the mobile wallet and, crucially, what role could they play in helping banks and other mobile payment service providers establish a point of difference in a contested and fragmented market?

Fast forward to 2016 and mobile wallets and their services are developing largely as anticipated: the user accumulates value, generated over time through repeat payments, which can be redeemed in a related form, usually at a time of the user’s choosing.

But something is nagging me. Something that hasn’t yet been discussed. 

As the years go by and NFC-enabled devices filter through to the mass market, the mobile payments user demographic is diversifying. What began with a select few affluent, financially astute and mobile tech-savvy early adopters, now encompasses those challenged by their finances, including those that struggle with credit-related problems, often due to rising living costs, unemployment or, notably, poor financial management.  And then, of course, there is everyone in between.

First of all, the words ‘value added services’: whose perspective do they reflect? Do they really mean what they should mean? To whom are they adding value? Who are they designed to serve? What should they achieve?

For those providing the payment service, the answers are fairly clear: More customers, more customer data. Increasingly targeted marketing and product development. More purchases. Increased revenue.

But on the other side, what’s in it for the customer? The opportunity to obtain a discount, of course.

Perhaps we should be talking in terms of incentives, instead. What are the various types of incentives being deployed to encourage regular use of mobile wallets?

Firstly, there are financial incentives, which provide users with a cash-back deal when they use their mobile wallet for payment, instead of a plastic card or cash. Then, there are product or service incentives: Android Pay has introduced the Tap10-promotion, for example, which offers consumers a free song for every tap&pay transaction performed. Elsewhere, Chase offers consumers a free album download to users that enroll their cards with Apple Pay.

For me, however, a far more thrilling incentive a bank could offer would be to take a completely different look at the scene to the retailers. Instead of encouraging consumers to spend, spend, spend, they could instead incentivise them to save, save, save. After all, the freedom generated by increasing one’s savings is arguably a far bigger incentive than a ‘free lunch’ triggered by the purchase of a certain number of goods or services. One could even foresee a situation where banks are giving their mobile wallet customers a saving incentive to help them fulfil their true dreams (and not just the dreams of retailers).

Getting customers to love their bank

There are already several fintechs offering money management services to consumers. Mobile wallet usage and VAS could similarly be used to promote sound financial management, potentially to a wider audience. Then, at the same time, the bank would position themselves as being on the side of their customers, protecting them from frittering away their hard-earned money, and instead encouraging savings and investments via regular use of their banking app.

I’d like to see VAS providers follow this lead. Executed sensitively, I believe customers would respond favourably. Many banks already have reputational issues relating to trust, so is it wise to issue VAS that solely encourage customers to spend? It doesn’t feel like the most effective way to win them over.

Perhaps VAS could be designed to reward savings deposits instead (‘interest’ for the mobile age). Maybe mobile money management services could be ‘unlocked’ within the wallet, just like in-app purchases, to reward daily balance checks or the regular viewing of transaction histories. Perhaps loyalty points could be gifted to those that successfully clear their credit card each month.

The mobile wallet is shaping up to be a hugely powerful customer interface. For banks with the creative vision to think a little differently, VAS could be a golden opportunity to demonstrate that they really are on the side of their customers.