CHICAGO – Tap and pay has a cool factor, but as long as it merely replaces the swipe of a card, it lacks long-term value, according to Jack Connors, head of commerce partnerships for Android Pay at Google.
Connors shared Google's plans to relaunch Android Pay this fall during a Tuesday afternoon keynote speech at the Mobile Payments Conference at Chicago's Hyatt Regency McCormick Place.
Starbucks did a good job of leveraging value with its payment app, Connors said.
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"They tapped into a visceral need – coffee – but if I use the app I get free coffee. It gives me more of what I want. Starbucks has it figured out," he said.
Mobile wallet providers face a value challenge because they can't offer the same value that merchants can.
"People will respond to free things they like," he said.
However, merchant apps only work for merchants that have frequent shoppers. Loyal Starbucks customers visit the coffee retailer every day. However, TGI Fridays' most loyal diners only eat there four times a year on average.
"An app with rewards won't work there," Connors said.
Mobile wallets can move beyond replacing swipe with tap by finding ways to offer merchant value to consumers, he said. Not only would that strategy incent consumers to adopt the wallet, it would also encourage merchants to participate.
To that end, Connors said Android Pay – Google's payment app that will relaunch this fall and come pre-installed on all Android phones – will pass both payment and non-payment credentials such as rewards and gift cards.
Connors showed a video that detailed how Android Pay will work with new Coke vending machines. Users will tap their phones against the vending machine, prompting a screen that displays the card associated with Android Pay and a pay button. Meanwhile, the vending machine will look up the user and retrieve rewards points, providing a points update and, if enough points are available, giving the user the option to pay for the drink with his or her account or points.
"We're helping Coke deliver value without the user having to punch in loyalty points into the machine," he said. "Merchants are distributing offers to customers, but there's nothing to tell the customer to use it."
Android Pay will include save buttons that will allow users to save rewards program information to the payment app. The feature will encourage merchants to participate by fostering more sales.
Android Pay will also support third party wallets. Connors said Google is planning a massive marketing effort behind the relaunch, and compared it to the hoopla that surrounded Apple Pay's launch last year.
"I would be surprised if an Android user come November doesn't know what Android Pay is," he said.
Connors also predicted mobile wallets will reach a tipping point in one to two years that will usher in a new era of adoption. Three factors will contribute to that change: Near Field Communication availability, consumer awareness and value.
EMV has changed the NFC landscape, he said. Merchants have upgraded payment terminals and now only need to turn NFC on to begin accepting mobile wallets. Additionally, signage will begin to appear at the point of sale reminding shoppers that a merchant accepts a mobile wallet.
"But availability and awareness don't create usage," he said. "Value does. Loyalty programs, rewards, enrollment in loyalty programs – wallets must extend that value into their own apps."
Third parties that specialize in integrating loyalty programs into mobile wallets will also play an important role, he added.
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