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Trends + Insights
Emerging Markets
Loyalty Programs
Mobile Banking
Virtual Wallet


Mobile Loyalty is Becoming a Must-have App for Mobile Banking

May 9, 2011
Charles Davis
By: Charles Davis
VRL provides independent incisive analysis and insight for the global cards and payments community.

As virtual wallets near the tipping point of widespread consumer acceptance, mobile loyalty is quickly becoming a must-have app for mobile banking offerings. In a sign of things to come, a flurry of new launches in the virtual wallet market provide businesses with a new way to deliver incentives for mobile customers.

According to Chetan Sharma Consulting, it's predicted that, by next year, 70 percent of the world's population will own a mobile device. And mobile web penetration globally is already above 25 per cent and rising rapidly. Expected to climb still higher, Gartner forecasts that US smartphone sales will jump from 2010's 67 million units to 95 million units by year's end. By contrast, mobile PC shipments are expected to rise, during the same period, from 45.6 million units to 50.9 million units.

Devices that combine mobility and access, such as smart phones, iPods and the Kindle book reader, create opportunities and stimulate demand for mobile media. The availability of GPS on mobile devices opens the door to countless new location-specific applications allowing people to do things that were the stuff of science fiction a few short years ago.

Mobile-based loyalty programs may be the first step toward the development of near field communication-powered mobile payments, getting cardholders signed up for virtual wallets that can then be expanded into other services.

One mobile wallet newcomer, Omnego Inc., has launched a mobile wallet application that allows consumers to take their physical loyalty cards, coupons, reward certificates and other merchant offers into digital formats usable on mobile devices such as smart phones.

Once the consumer downloads Omnego's Walgo app, they can create a mobile card from any loyalty or frequent-user, coupon or membership card - the app creates an exact physical representation of the card on the app.

"That mobile card gives the business a channel for ongoing engagement using mobile ads, mobile coupons, or links that can access the business's mobile web content and applications," said David Thomas, CEO and founder of Omnego. "The business can track usage, and alert them if they aren't using their cards with special offers. It's a better way to build customer loyalty while also giving the consumer a much better experience."

The Toronto-based mobile technology company's mobile loyalty and rewards program may be used by any merchant or business with loyalty programs such as gift cards, membership cards or coupons. Participating merchants must also have point-of-sale scanners capable of reading digital bar codes.

To participate, merchants use a Web-based platform to create digital versions of their loyalty or rewards cards, which are exact replicas of the physical cards. The platform also enables merchants to manage programs associated with the card, such as promotions and deals.

The Omnego mobile card and marketing solution consists of two parts. The back end is a web-based, enterprise platform providing mobile card and marketing management. The consumer face of Omnego is Walgo (for "wallet on the go"), a consumer mobile wallet application available for all major smartphone operating systems (iPhone, Blackberry, Android and Symbian).

"It's an engagement point for business that is always with the consumer and always an," Thomas said. "It allows delivery of offers instantaneously and allows the business to stay in contact with their customer base on the channel they choose."

Another mobile wallet product, by Cardmobili, is building a mobile loyalty offering using cloud computing technology. After successful launches in Europe and the US, Cardmobili recently expanded to Canada, said Jeff Seabloom, senior vice president of US operations for Cardmobili.

Cardmobili is a free service that allows consumers to consolidate all of their loyalty, membership, rewards and association cards and any other valuable information directly into their mobile phones.

Cardmobili is building a cloud with more than 1,500 programs and memberships, but cardholders can also choose to add their own custom card online. The service is adding more cards every day based on direct feedback from consumers and social networks.

Seabloom said that Cardmobili is attractive to merchants because it provides standard interfaces to ensure seamless integration with merchants' CRM systems, thus enabling any program with mobile functionality for loyalty and marketing programs as well as promotions, brand awareness and direct communication to consumer's mobile devices without the need for major investments in systems and infrastructure.

"This puts all the consumer's cards in one place, allows them to store them all, access them remotely and organizes them, but it's at least as important to note that the Cardmobili platform allows businesses with customers on the cloud to receive offers on their phone," Seabrook said. "So the tie to programmatic benefits, and customer communication, loyalty, is huge, and we allow the card side to present offers and communication to the consumers in the cloud."

Seabrook noted that mobile loyalty programs offer several advantages for card issuers: on-boarding fee reduction by up to 88 percent, increased customer interaction, including recognition and incentives for segments of customers. They also offer the opportunity to drive retail traffic and brand preference with targeted paper-free vouchers, promotions and rewards.

Other competitors emerge seemingly daily in the virtual wallet market. PlacePop, for example, allows any company to create and maintain virtual loyalty cards online. Consumers can "check-in" through the application, earn points and earn free products or special privileges for being a virtual card holder. The more points a user earns the higher their level, starting at bronze, then on to silver, gold and platinum. Businesses can customize their card and loyalty program on the app.

Major players like Foursquare, Tetherball, Loopt, Shopkick and Gowalla are starting to add loyalty rewards to their services as well, giving brands the means to offer specials or promotions to those who check-in to a particular venue


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