With Apple Pay launching in the UK this week, the uptake of NFC-based mobile payments is going to take on hugely increased momentum and for many consumers pay-by-phone will be become business-as-usual in a very short time. Even in the last couple of years there seems to have been a shift in the way people are using their smartphones (and tablets), turning to apps for such diverse activities as online banking, fitness tracking and of course consuming media content. Some even make calls. For many people the phone has replaced other devices – I know hardly anyone under 35 who stills wears a watch that just tells the time, and everything from notebooks and diaries through to compact cameras and spirit levels have bitten the dust. So why wouldn’t you use your phone for payments?

There’s appetite among consumers but what’s in it for banks and merchants? If phone payments simply cannibalise card payments then a large investment in mobile technology and infrastructure will have resulted in zero benefit. But once again Apple have divined the future and recognised that there has to be added value to sustain the mobile commerce ecosystem. With the introduction of loyalty into the newly-renamed Apple Wallet, merchants, and in some cases issuers, have a means to incentivise incremental spending on the phone. How’s that different to using a separate physical card when making a purchase? It’s not – if that was all there was to it; if the loyalty ‘token’ was just an electronic version of a static loyalty card. In electronic form loyalty can become dynamic and the wallet used as the repository for e-coupons redeemable for discounts and other offers. These could be delivered by push notifications or picked up by the consumer from merchant websites, but real incremental value can be driven in a much more targeted and relevant way by proximity engagement based on NFC tags or QR codes, which require action by the consumer, but most excitingly through BLE beacons, which do not. The ability to push relevant and compelling offers to consumers based on their location and their known preferences, even taking account of how long they’ve been at a given location or how many times they’ve visited in the past week or month has a far higher probability of successfully influencing consumer behaviour, and in a way that feels customised for them, unlike indiscriminate offers that could easily start to feel intrusive and likely to have a very low conversion rate.

Mobile payments, coupled with such loyalty and marketing value-added services, bring to the consumer a rich, connected and compelling m-commerce experience, and this will be the real differentiator and the key factor underpinning any successful mobile payments solution.