If you grew up during the ’70s, ’80s or ’90s, you probably remember seeing branded credit cards offered by some of the biggest names in retail. You could use your JCPenney card at most stores — but using it specifically at JCPenney allowed you to rack up certain discounts and loyalty points.
These types of cards still exist — and probably won’t go away anytime soon.
However, big-box retailers are increasingly exploring a new payment option — i.e., mobile wallets that are directly tied to branded smartphone apps.
From Kohl’s Wallet to Walmart Pay to Target Wallet, each store uses a slightly different name — but the basic functionality remains the same:
- Most of these mobile wallets allow shoppers to scan items as they add them to their carts.
- Nearly all of them permit users to “check out” by holding their phones next to a bar reader or near-field communication terminal.
Why this growing interest in big-box mobile wallets?
The Pros of Branded, Mobile Payment Options
Ease and convenience are two of the biggest drivers behind this trend. Without the need to interface with cashiers, shoppers benefit from:
- Shorter lines
- Faster checkouts
- Less time at the credit card terminal
Target estimates that its new mobile wallet has reduced checkout times by as much as 25 percent.
The retailers themselves also benefit:
- They don’t have to staff as many cashiers, allowing the stores to save more money.
- They can sell more items per unit of time, allowing them to generate higher sales.
In addition, mobile payments allow retailers to more accurately track and analyze individual shopping preferences. In the absence of this technology, all a store really knows is what items are selling — and which ones aren’t. From this information, you can make macro assessments about customer behavior.
With a branded mobile wallet, however, you know precisely the who, what, where and when of every purchase. This allows you to develop better marketing campaigns and more robust loyalty programs. This is especially true if these shopping data points are aggregated centrally and shared throughout the retailer’s network.
Given these advantages, why doesn’t every store already have its own mobile wallet?
The Cons of Branded, Mobile Payment Options
There are a few reasons why retailers might think twice before launching their own in-store mobile wallets.
First, you’ve got to build the app. That’s easy to do if you have big-box resources. For small shops, however, the process is a lot more daunting.
Next, you must onboard customers and train them in the “benefits” of using your new mobile wallet. This is relatively straightforward. Just as with the JCPenney cards of yesterday, you can offer deep discounts to help attract customers.
Arguably the biggest hurdle, however, is security.
Target is no stranger to data breaches. Launching a new mobile app simply creates another potential vulnerability for hackers to exploit. For some retailers, this extra exposure and responsibility aren’t worth the risk.
Should You Launch Your Own Mobile Wallet?
There are pros and cons of this trending payment option. Depending on the type of store you operate, it may make sense to put off launching your own mobile wallet.
Then again, you might not have a choice. Mobile payment options could become the official standard for retailers across the country. To learn why, be sure to read How Amazon Go Grocery Stores Might Impact Merchants.
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