In the U.S. point-of-sale retail environment, consumers are accustomed to looking for Visa, MasterCard, American Express and Discover’s acceptance marks at cash registers and on entry doors. But as payment cards bearing these legacy network imprints get rolled into mobile wallets, their brands may fade into the background, according to a report from the Mercator Advisory Group.
“The mobile wallet brand, such as LevelUp, Lemon or Isis, becomes an acceptance mark in its own right, and the payment credential that consumers use within the mobile wallet becomes subordinate to that wallet brand,” said Patricia Hewitt, director of Mercator’s Debit Advisory Service and author of “Mobile Wallets: The Business and the Brand.”
And because mobile wallet branding is a complicated mix of new and legacy brands, the report noted, many of the largest U.S. card issuers are forced to participate in multiple wallet formats to prevent the exclusion of their brand.
Large U.S banks are trying to figure out how to fit mobile wallets into their mobile banking and payments strategies, Hewitt said. “They are testing mobile wallets, for example through participating in mobile wallet initiatives such as Isis or Google Wallet,” she said.
The Mercator report warns that the mobile wallet market, at least in the U.S., remains the financial institution segment’s to lose.
“Financial institutions and card networks stand to gain or lose brand equity based on the ability for new market entrants to create a more valuable mobile wallet product either through their own efforts or by leveraging expert platforms,” the report said. “New market entrants in this category include Isis, MCX and Apple, all of which place a unique corporate brand ahead of any issuer or card network.”
Banks enjoy a key long-term advantage in the mobile wallet market, the report added, by potentially capturing more of a consumer’s financial services lifestyle than any non-bank mobile wallet issuer can achieve.
Another advantage for banks: consumer confidence. “Our research has found that U.S. consumers trust their banks to hold their money,” Hewitt said. “This trust gives banks an advantage over non-bank mobile wallet issuers, especially once consumers start to store identity credentials such as driver’s licenses in their mobile wallets. This will really up the ante for mobile wallet security.”
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