Integration of loyalty programs with mobile payment expected to be one of the key growth drivers in the US

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Until now a dozen of mobile wallets starting from Apple Pay to Google wallet and Android Pay have been launched in the US market. While it is evident that mobile payments have grown steadily in the country, it is still facing some major challenges.

• One of the primary concerns revolves around security issues. This subject has been highlighted before launch of mobile wallets and still remains a challenge. Over 50% internet users are hesitant towards mobile payments due to security concerns.
• Payment based technologies are fragmented. There are different technologies such as NFC, cloud based and code based supporting mobile payments and merchants need different equipment to support cashless payments from consumers. This has also affected payments at POS terminals.
• Mobile wallet segment is currently facing stiff competition as many contenders are launching their own wallets including banks, retailers and financial institutions

These have led to an increased fragmentation in US mobile payment segment. However, loyalty programs can be influential in handling this scenario. Around 70% smartphone users have expressed their interest in loyalty programs and reward systems in mobile wallets. On an average every consumer is associated with six different loyalty programs. So transferring reward points within different programs is expected to draw in more adoption. A single platform which allow earning and spending of reward points across multiple retailers is likely influence more consumers towards mobile payments. It is expected to drive customer engagement and brand loyalty as well. Wallgreens, the pharmacy chain based out of US became the first merchant to integrate their own loyalty program to Android Pay. It had also integrated its loyalty program with Apple Pay last year. During last quarter of 2015, when Apple Pay enabled store and loyalty card integration, 25% of the cards were loyalty or store based. During the end of 2015, MasterCard had announced that it is working towards integrating loyalty rewards in mobile wallets.

To know more and gain deeper understanding of mobile payment industry in the US, click here.