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We live in an economy where personal consumption is over $11 trillion and plastic payments have surpassed all other payment options at the point-of-sale. Mobile payments, however, remain a nascent offering, representing
only 0.01% of retail purchase volume.1 Despite a rise in consumer spending, consumers are remaining wary. The American consumer is selecting payment methods more deliberatively, both when and where to use credit, debit, or prepaid cards and choosing those programs that provide the greatest value.
In this environment, loyalty programs have an unprecedented opportunity to interact with members and reinforce the value of their chosen program in a meaningful way. Loyalty points redemption at the point-of-sale may just be the preferred mechanism for strengthening loyalty by giving members the value they desire, the redemption choice they seek, and the flexibility they need. And, at the same time, it provides for that strong use case that digital wallets need in order break through user adoption: consumer can pay with new money and merchants get access to new money.
The Consumer Landscape
The payments and loyalty industries today are more dynamic, in evolutionary and revolutionary terms, than they have been in the last half century. Without a doubt, the unprecedented proliferation of mobile and smart phones has led this transformation. Today, smartphone penetration is 58% of the US mobile subscriber base.2 It is, arguably, the most pervasive global technology ever invented, even exceeding that of electricity.3 As such, mobile has fundamentally changed how consumers search, engage, and consume.
We have witnessed a dizzying rush by new and established companies to capitalize on mobile and all that it affords. New en- gagement models have been developed with seemingly endless more to come. There are new payment and loyalty schemes being introduced regularly. For the merchant and consumer, this is both exciting and confusing.