Death Knell for Loyalty Cards

What does that do for the traditional plastic card-based loyalty program? You would find it odd if the grocery store or restaurant where you just used your mobile phone for payment asks you to carry a plastic loyalty card — consumers paying via a mobile NFC chip or other similar mechanism are going to flatly refuse carrying that plastic.

An article in Business Solutions Magazine titled The Implications of Google Wallet caught my attention. The author (an informed source, being the SVP of Advanced Solutions and Innovations of First data) states “…[w]e expect high growth rates for mobile payments in the coming years, with wide-spread adoption in the United States in the next year or so.”

He goes on to state that it’s the end of the leather wallet. Think about this for a moment: I visit my favorite restaurant or grocery store, take out my phone and wave it in front of the credit card swipe terminal (now just a payment terminal), confirm my purchase with an on-screen pop-up and I’m out the door.

To encourage loyalty program participation, loyalty programs themselves are going to have to go mobile as well. You will not likely want to share your personally identifiable information with every merchant with which you conduct business; however, you will want to participate in programs with certain merchants you frequent.

…[w]e expect high growth rates for mobile payments in the coming years, with wide-spread adoption in the United States in the next year or so.

This will happen in one of two ways: the merchant will give you an automatic “loyalty punch” on your NFC-enabled payment device for each visit (think Google’s recent purchase ofPunch’d) or you will share a single bit of identifiable personal data with the merchant at the time of purchase: your mobile number.

In the Punch’d model, your participation with the merchant is anonymous. You’ll receive rewards for actions you’d normally take — visiting the store and buying their product. In the second model, you have shared the one bit of data with the merchant that can be the jumping off point for a rich on-going conversation and recurring engagement.

By giving the merchant your mobile number, the merchant can send you special offers (“it’s a slow night for us – 25% off for the next 4 hours”), event notices (“we’re raising money for the XYZ charity – come by this week and we’ll donate 15% of your purchase”), and other relevant messages you want from the merchant.

Mobile payments and loyalty offer increased convenience for consumers and more marketing power for merchants — while leaving consumers in complete control of the engagement.

I, for one, am looking forward to the day that I don’t have to sit on a wallet full of plastic. What do you think?