Universal Offers Standards, Digital IDs Needed To Drive Wider Mobile-Wallet Adoption

Consumer confusion, lack of standards for offers, and splintered merchant acceptance continue to impede mobile-wallet adoption among consumers, but they are not expected to thwart the long-term prospects for the payments model, suggested panelists on Wednesday at the NFC Solutions Summit in Phoenix.

Near-field communication (NFC) technology not only can be part of the payments element in a mobile wallet, but could provide the connectivity for enabling consumer’s mobile-based coupon and offer redemption.

“The first generation of mobile wallets focused on individual business models,” said Steve Mott, principal at Stamford, Conn.-based consultancy BetterBuyDesign. “What’s missing is how do you capture an end-to-end retailer experience that makes the payment and rewards experience integrated into the transaction?”

From his perspective, the answer lies not in thinking about payments, but in embracing consumers’ primary need to increase efficiency in their lifestyles, Mott said.

For many consumers—as it relates to commerce—that efficiency includes offers and loyalty, but the problem is the fragmentation of offers and loyalty. Each retailer has its own program, making it more difficult to provide uniform rewards, which can hamper mobile-wallet adoption.

Getting past that obstacle could be aided by standards. “It falls to standards again, hopefully,” Oliver Manahan, vice president of emerging payments at MasterCard, said. While television character George Costanza’s wallet, overstuffed with receipts and coupons, may not have the same popular cultural impact it once did, consumers are still required to make at least a two-step interaction to both redeem offers and make a payment, he says. “The ultimate spot will be a one-tap transaction based on a standard.”

Getting to a universal standard for coupons and offers will be very difficult, said Phil Kumnick, head of global acquirer processing at Visa Inc. “The intelligence we have to build into machines, that’s going to be the secret,” he noted. “The commerce event is evolving and will continue to evolve. Payments is at the end of the event. The commerce experience is changing the world we live in because consumers are demanding convenience and merchants are demanding an experience that as an industry we’re going to have a challenge to keep up with.”

The challenge will be accelerating standards development fast enough to meet the demands of the marketplace, Kumnick said.

Mobile-wallet adoption, too, could widen if other items that consumers typically carry in their wallets could be adapted digitally. “The sooner we get there, the better,” Mott said of digital-identity documentation.

Consumers will tote physical wallets as long as their driver’s licenses and other identity information are only available in a physical format. Ultimately, Mott said, the decisive factor is that these documents access a lot of secure data.

Internationally, many governments require some form of national identification to get access to financial services, a path that often generates an “absolutely visceral reaction” in the United States, Manahan says. One way a digital driver’s license could become a reality is if consumers demand it, he said.

The NFC Solutions Summit is produced by the Smart Card Alliance, a Princeton Junction, N.J.-based trade group.