Android Pay finds its first loyalty partner in Walgreens
Walgreens has become the first company to integrate its loyalty programme with Android Pay. According to the Federal Reserve, 22% of US adults wanted to use their smartphones to "organise, track, and store gift cards, memberships, loyalty, and rewards points", while 67% of UK and US adults want loyalty card integration for their mobile wallets, according to Urban Airship's data. Walgreens already has 85 million members in its Balance Rewards scheme, more than half of whom are Android users. Mobile payments are set to rise from $75bn this year to $503bn in 2020.
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Walgreens, the U.S. pharmacy chain with more than 8,000 stores, will become the first merchant to integrate its loyalty program into Android Pay, the company announced.

Users will be able to tap to earn and redeem loyalty points at the checkout ahead of making a payment. This is a significant development because loyalty is the top desired service among mobile wallet users, and Apple Pay already offers this capability.

Twenty-two percent of US adults noted that they would like to use their mobile phones to organize, track, and store gift cards, memberships, loyalty, and rewards points as of the end of last year, according to the Federal Reserve. That number spikes when loyalty is directly affiliated with mobile wallets specifically — 67% of UK and US adults want loyalty card integration for their mobile wallets, according to data from Urban Airship.

And when it is available, consumers take to it quickly. In Q4 2015, just a few months after Apple Pay enabled store and loyalty card integration, 25% of cards loaded into Apple Pay among US iPhone 6 users were store or loyalty cards.

Pharmacy chains are a good place for mobile wallets to begin implementing loyalty. It’s likely that pharmacy chains like Walgreens have strong loyalty programs with an active, engaged user base because consumers tend to visit on a recurring basis to buy goods or fill prescriptions. Walgreens counts 85 million members in its Balance Rewards program, 45 million of whom are likely Android users based on data from comScore.

That provides Android Pay with a strong addressable base who might test Android Pay for Balance Rewards and ultimately load in other payment cards and begin using the service in other locations. And in turn, it might give the service, which remains largely underutilized, a needed boost and begin to kickstart adoption.

Mobile payments are becoming more popular, but they still face some high barriers, such as consumers' continued loyalty to traditional payment methods and fragmented acceptance among merchants. But as loyalty programs are integrated and more consumers rely on their mobile wallets for other features like in-app payments, adoption and usage will surge over the next few years.

Evan Bakker, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on mobile payments that forecasts the growth of in-store mobile payments in the U.S., analyzes the performance of major mobile wallets like Apple Pay, Android Pay, and Samsung Pay, and addresses the barriers holding mobile payments back as well as the benefits that will propel adoption.

Here are some key takeaways from the report:

In our latest US in-store mobile payments forecast, we find that volume will reach $75 billion this year. We expect volume to pick up significantly by 2020, reaching $503 billion. This reflects a compound annual growth rate (CAGR) of 80% between 2015 and 2020.

Consumer interest is the primary barrier to mobile payments adoption. Surveys indicate that the issue is less the mobile wallet itself and more that people remain loyal to traditional payment methods and show little enthusiasm for picking up new habits.

Integrated loyalty programs and other add-on features will be key to mobile wallets taking off. Consumers are showing interest in wallets with integrated loyalty programs. Other potential add-ons, like in-app, in-browser, and P2P payments, will also start fueling adoption. This strategy has been proved successful in China with platforms like WeChat and Alipay.

In full, the report:



Forecasts the growth of US in-store mobile payments volume and users through 2020.

Measures mobile wallet user engagement by forecasting mobile payments' share of their annual retail spending.

Reviews the performance of major mobile wallets like Apple Pay and Samsung Pay.

Addresses the key barriers that are preventing mobile in-store payments from taking off.

Identifies the growth drivers that will ultimately carve a path for mainstream adoption.

To get your copy of this invaluable guide, choose one of these options:

Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of how mobile payments are rapidly evolving.





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