Mobile wallet technology boosts convenience for consumers and card issuers alike

Gerhard Oosthuizen|08 March 2018
Mobile wallet technology boosts convenience for consumers and card issuers alike

Today, mobile wallets are just one component of your institution’s overarching digital banking strategy. With the right solution in place, consumers can enjoy a superior payment experience whether shopping online, using a third-party wallet, or using a contactless payment method. Mobile wallet adoption in the US is increasing as more secure options become available, and as the technology continues to improve, it is important for both banks and consumers to realize the benefits of this particular payment model.

Getting consumers on board

No-one likes long lines or delays as part of their retail experience, but many popular mobile wallet offerings, like Apple Pay or Samsung Pay, require a first step of manually entering credit card information into the application to begin making payments. This adds friction to the process – something that can be avoided when consumers use their financial institution’s mobile wallet app. The friction gets even worse with third-party wallets, where you first have to download an app and register for a service. The extra step of enrolling a card is unnecessary with a bank-enabled mobile wallet, because the application is already connected to the consumer’s bank account, and uses the bank’s trusted transaction authentication to streamline payment processes.

Besides the inconvenience of manual enrolment, there is also an inherent trust issue in sharing account information, especially with a third-party payment portal. With the right mobile-enabled digital banking security, registering a card on the same mobile banking channel is not a concern for banks or consumers, and end-users only need to tap or scan their phones to make a transaction.

Some key benefits of using a bank-enabled mobile wallet for consumers include:

  • A secure, low-friction user experience;
  • The ability to pre-enrol card details;
  • Automated updating (e.g. when a card is replaced);
  • The ability to re-use banking credentials (instead of having to enter a CVV or ATM PIN number); and
  • The option of making payments via non-traditional form factors, such as QR codes or geolocation.

Benefits for banks

Eliminating these mobile banking barriers to entry helps on the issuer side as well. Mobile wallet providers normally need to get a critical mass of end-users enrolled for retailers to consider enabling a certain payment method. However, end-users will typically enroll only if they can pay at a large number of acceptance points — a classic Catch-22.

For example, one bank with eight million cards achieved only 50 000 manual downloads of its separate payment app over a period of two years. In that situation, retailers would ask: why support a new payment model with an end-user volume of 50 000 when eight million are already using the established mobile banking platform? However, they would quickly change their minds if those eight million accounts were activated overnight and ready to be used anywhere the next day through the institution’s mobile banking application.

Together, banks and merchants can offer terminal-less payment experiences, like offering instant payment codes on utility bills and in print advertisements. Vendors at temporary retail locations, such as farmer’s markets, will not have to worry about carrying cash; and consumers can simply scan their mobile devices or a QR code to settle transactions, saving both parties valuable time.

With new technology helping to create low-friction transactions, mobile wallets are moving convenience to the front of the line for consumers, retailers and banks. Financial services providers and e-commerce merchants can push their security further by utilizing an authentication platform that enhances the user experience on all digital platforms, including the mobile wallet, and gives consumers the power to take control of how and where they transact.

About the author

Gerhard Oosthuizen

Gerhard Oosthuizen

CTO

Gerhard provides the organizational and operations heft to turn vision into reality. His role at Entersekt represents the CTO function in its purest and most exciting form. Our purpose is, after all, to design and build high-performance, market-leading software and support systems for an international customer base with extremely high expectations.

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