Wednesday, 12 March 2014

Mobile Wallets Should Fix What’s Broken – And It Ain’t Payments

My leather wallet wore out recently. With so much buzz around mobile wallets, I was wondering if I should even bother with another leather wallet. Before switching to a mobile wallet, I inventoried the contents of my wallet and arranged them into two piles. LHS: This pile contained payment related items such as cash, two credit cards and one debit card. RHS: All non payment related items went into this pile. A partial list of contents included many store loyalty cards, two driving licenses, one paper receipt, one health insurance card and one alumnus card. It was immediately obvious that the pile on the right was much larger than the one on the left. Look like it's no different for most people: According to this PandoDaily article, "Physical wallets, pockets, and purses... carry a wide variety of items, from cash and credit cards to coupons and boarding passes." Looking at the plastic payment cards on the LHS, I realized - like many others - that nothing is broken with them. It's no big deal carrying two credit cards and one debit card. Even people who use many more cards than me on a regular basis can always choose to leave a few of them behind at home. This is possible because payment cards are interchangeable, which means any (open loop) card will work at any store. For eons, I'm used to handing over my plastic cards at checkout or doing the swipe, dip or tap action myself where the merchant allows it. Therefore, I don't see a compelling reason to change the way I use my payment cards. On the other hand, plastic loyalty cards on the RHS are a major source of pain. First of all, there are too many of them to fit in my wallet. I can't take an arbitrary decision to leave some cards behind since I'd lose rewards when I shop at those stores. Barring a few coalition cards like PAYBACK and NECTAR,  loyalty cards are not interchangeable across stores. Secondly, I forfeit rewards on shopping done by others in my family at a certain retailer when its loyalty card is in my wallet. These are pain areas worth resolving. Mobile wallets fit the bill perfectly. All of them obviate the need to carry multiple cards. Some like KeyRing allow users to scan a single loyalty card into multiple smartphones, so they can earn rewards whenever any of their family members go shopping. While I still need to go out and buy another leather wallet, I can avoid cramming all my store loyalty cards into it by moving them to a mobile wallet. I can already hear people suffixing the last sentence with "provided merchants accept loyalty cards off of smartphones". I agree that that's not a given. But, in the next part of this post, I'll explain why merchants are lot more likely to accept mobile wallets for loyalty - rather than payment - cards. Watch this space. Guest Blog (Contributed by S. Ketharaman)

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