Chip-Enabled Mobile Marketing
Publication Date: October 2010
The proliferation of mobile phones, especially smartphones, is driving the evolution of an exciting new capability that benefits both consumers and retailers: the ability, in real-time, to participate in interactions tailored to a consumer’s preferences and location. Early results demonstrate dramatic improvements in the effectiveness of marketing campaigns and offer redemption rates in comparison with traditional paper coupons. As a result, mobile marketing and advertising is projected to nearly triple in the next three years.
Multiple approaches are being tested, including mobile Web searches, barcodes or simple numeric coded coupons, text message campaigns, back-end-based loyalty programs enabled with stickers, and approaches based on Near Field Communication (NFC)-enabled wallets. While various bridging technologies are being tested, such as stickers and microSD cards, the ultimate solution leveraging secure chip technology will optimize usability, convenience, security, and the ability of consumers to opt in to marketing campaigns as desired.
Chip-enabled mobile marketing offers great value for consumers, marketers, and banks. Consumers can be freed from carrying paper coupons and plastic cards and benefit from increased personalization, convenience, and control. Marketers, including merchants, can dramatically decrease their costs and improve targeting effectiveness, finding new ways to leverage real-time analytical data and engage customers. Banks can realize more revenue and gain better insight into their customers’ preferences.
While mobile marketing is relatively new to the United States, its use in Asia goes back more than 10 years. A review of 20 examples of mobile marketing around the world uncovers models for loyalty, smart posters, coupons, advertising, offers and merchandising. The various incentives–rational vs. emotive–cater to consumers based on the relationship basis–“transactors” vs. “loyals.”
It will be important to implement an appropriate level of security to protect coupons, offers, and loyalty points. Possible levels range from no security, in which coupons can be duplicated, to hardened security, in which encryption and the use of the secure element mean that the contents of a mobile wallet are protected as securely as a payment application.
Implementing mobile marketing is complicated by the number of new players and the requirement to integrate with many legacy systems. Merchants, consumer brands, aggregators, application providers, trusted service managers, and mobile network operators all collaborate to provide value exchange for consumers. While NFC integrated into the mobile phone is the end game, chip-enabled approaches are evolving along a spectrum of increasing device integration, from non-integrated fobs and stickers to NFC-enabled accessories to embedded NFC chips.
Standards for interoperability within the marketing ecosystem are not as mature as payment standards and will likely conform to GlobalPlatform standards. Of particular interest is the standardized interface between mobile marketing and contactless payments. Ideally, mobile marketing and contactless payments should be tightly linked to drive consumer adoption. The evolution of capabilities available on mobile devices, such as cameras, speakers, accelerometers, and Wi-Fi, creates even more opportunities, but it will be critical for the mobile phone’s NFC functions to be able to interface with these capabilities to take advantage of them.
Mobile technologies, combined with security, opt-in services for consumers, and global positioning, will unleash a flood of innovation. In the future, we are likely to see increased use of instant promotions, cross-promotions, and more merchandising techniques to engage and excite shoppers.
About the White Paper
The Smart Card Alliance Payments Council developed this white paper to describe chip-enabled mobile marketing and discuss the value propositions and implementation approaches. The white paper includes an overview of mobile marketing applications and approaches, the value proposition of chip-enabled mobile marketing, use cases for chip-enabled mobile marketing (with 20 pilots or commercial services profiled), and implementation approaches.
Payments Council members involved in the development of this white paper included: Accenture LLP; Capgemini; Capital One; Cubic; DeviceFidelity, Inc.; Discover Financial Services; First Data Corporation; Heartland Payment Systems; HID Global; Hewlett-Packard Enterprise Services; IBM; INSIDE Contactless; JPMorgan Chase; LoyaltyOne, Inc.; MasterCard Worldwide; NagraID Security; Oberthur Technologies; OTI America; Smartcard Marketing Solutions; Visa, Inc. ; ViVOtech; Watchdata Technologies.
About the Smart Card Alliance Payments Council
The Smart Card Alliance Payments Council focuses on facilitating the adoption of chip-enabled payments and payment applications in the U.S. through education programs for consumers, merchants, issuers, acquirers/processors, government regulators, mobile telecommunications providers and payments service providers. The group is bringing together payments industry stakeholders, including payments industry leaders, merchants and suppliers, and is working on projects related to implementing EMV, contactless payments, NFC-enabled payments and applications, mobile payments, and chip-enabled e-commerce. The Council’s primary goal is to inform and educate the market about the value of chip-enabled payments in improving the security of the payments infrastructure and in enhancing the value of payments and payment-related applications for industry stakeholders. Council participation is open to any Smart Card Alliance member who wishes to contribute to the Council projects.