OVUM COMMENT
Gilles Ubaghs, Senior Analyst, Financial Services Technology
Analytics and Loyalty will drive Mobile Payments Growth
Mobile proximity payments have to date proven lacklustre and despite hundreds of millions spent on developing these
platforms, consumer take-up remains virtually non-existent. While the reasons for this are many, the application of
loyalty rewards and benefits via the digital wallet is now seen by many as potentially the killer app that will help to
finally ignite the long simmering mobile proximity payment market.
Ovum’s research highlights that 53% of consumers globally report they’ve either used or are interested in redeeming
offers and coupons with their handsets, while 44% have used or are interested using their mobile device to pay for
things in store and restaurants. Combined rewards and offers in conjunction with mobile payments are set to be a common
feature in the near term as a means to reach consumers and drive spending in new ways. Already today new services such
as the Coles Mobile Wallet, with FlyBuys integration and mobile payment services from the likes of Starbucks, McDonalds
and others shows investment here is high and growing.
As highlighted in Ovum’s recent report, “Loyalty and Location Based Payment Services”, launching these services easier
said than done as the loyalty market itself continues to undergo a disruptive evolution just as powerful as that
impacting the payments space. In particular the loyalty market is rapidly becoming inundated with offers and daily deals
leading to a growing need for more personalized and targeted offers to consumers to help maintain engagement levels
among an increasingly fickle audience.
Achieving this from a merchant or bank perspective requires developing extensive Big Data capabilities that extend
beyond just traditional top level basket transaction data, and must now include applying analytics on a range of
consumer data down to location and SKU specific data. This will require greater levels of cooperation between payment
providers and merchants and represents a growing market opportunity for big hitting third party loyalty and analytics
vendors such as Aimia, Oracle, IBM as well as opportunities for emerging start up players.
Payment providers today already hold a rich seam of transaction data that can be and already is applied to loyalty
programs. However, much of this data remains largely unstructured and the needs of modern loyalty programs remains
largely ill-defined. Wallet providers who can crack this and create a broader payments loyalty ecosystem have the
potential to both drive mobile wallet usage and create new consumer retail experiences beyond the POS.
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