By: Brad Giles, Vice President of Channel Marketing at Cayan

Mobile wallets have been around for years now, and industry experts have called them The Next Big Thing in payments for their entire existence. But adoption rates have never quite matched up to the enthusiasm and excitement—while mobile wallet share is increasing month to month, it’s still dwarfed by physical card transactions.

Of course, no one is giving up on mobile wallets just yet. The question remains: Is there still a tipping point ahead?

Can loyalty programs help mobile wallets grow?
To see a massive boost in use, mobile wallets need to be more appealing both to customers and merchants. It’s not merely a matter of simpler technology, because mobile wallet developers have been working diligently to make the technology as friction‐free as possible. It’s also a question of benefit.

Both consumers and merchants need to see a bigger benefit in using the tech more often. Now, as mobile wallets begin to include more loyalty capabilities tied in with offers and rewards, many are wondering if this could be an area of mutual excitement for both consumers and merchants—one that could lead to fast growth in use.

Why they could drive consumer use
The basic, original value prop of the mobile wallet was the ability to pay with your phone. People did not take to it in the numbers analysts expected, and one reason may be because it didn’t streamline transactions significantly. Between asking if mobile pay is accepted, taking the time to develop a new habit, and the remaining necessity of a physical wallet, it seems that consumers don’t yet see the full benefit.

Yet if loyalty is widely integrated in the many unique ways developers are currently imagining, mobile wallets could consolidate many different functions. Not all of these functions have arrived yet, but many developers believe they could be on the way soon.

With mobile wallet/loyalty, customers would no longer have to fish out their loyalty cards or offer their phone numbers (or even remember they’d already signed up) to get points or rewards, and they wouldn’t even have to take a receipt—the phone could download it for them automatically, making record keeping and returns easier down the line, too. Crucially, all this could be accomplished in a tap or two, meaning that mobile wallets would speed up transactions. Consumers would be out of the store faster.

In addition, even when customers are away from the store, a mobile wallet could be their payment hub. They could see what offers sit in their wallet and even see if companies are giving them other deals to choose from. Maybe when they click on a Facebook ad for an offer, the deal is placed directly into their mobile wallet. Suddenly, mobile wallets are at the center of the shopping experience.

Why the idea appeals to merchants
When mobile pay began, merchants weren’t highly incentivized to encourage mobile wallet use, but that could change if loyalty becomes more central to the experience.

Nearly every company realizes the benefits of loyalty programs—an Accenture study, for instance, found that loyalty members will spend 12%‐18% more than non‐loyalty members at the same store. If mobile wallets encourage the use of loyalty, then merchants could begin to favor mobile payments.

It could impact the process from the very first step of loyalty. Sign up itself is one of the largest obstacles to overcome, as customers often feel the pressure of a line behind them and just want to be done with the transaction as soon as possible. But digital technology could make sign up simple, even prompting customers to auto enroll with a few simple taps when they use a terminal at a new business.

Another reason that merchants love loyalty: They get more information about what drives consumers. With more accurately targeted deals, merchants can drive bigger tickets and return visits. Not only that, mobile wallets could make tracking offer usage even easier—stores are willing to pay significant sums for customer acquisition, but only when they can be certain what led to that acquisition. With mobile wallets, merchants can track more closely and precisely.

Is the tipping point imminent?
Many, many people have been making bold predictions about the coming explosion of mobile wallet use for years, so at this point, it’s hard to say for certain. But the expanding capabilities of mobile bodes well for increased usage.

Many of these features aren’t here yet. But it’s clear that Apple Pay and other mobile wallet organizations are already making progress in areas like these—and they likely also have ideas that can’t even be guessed at yet.

With just a tap or two, customers will be able to speed up transactions, save money, and better organize their lives, and merchants will be able to keep customers coming back more often. It’s a win‐win for all involved, and it could lead to both sides encouraging the other to use and accept mobile more often.