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Study: Mobile wallets may threaten customer loyalty to credit card brands

September 13, 2011

According to a recent study from investment resource Morningstar, equipping a smartphone with mobile credit card payment technology may reduce brand loyalty, Payments Source reports.

According to a recent study from investment resource Morningstar, equipping a smartphone with mobile credit card payment technology may reduce brand loyalty, Payments Source reports.

“The ability to store an indefinite number of payment options on one device would enable spending volumes to move from one payment brand to another more efficiently, essentially lowering the stickiness of payment volumes and eroding cardholder loyalty to a given brand,” writes Michael Kon, Morningstar CPA, as quoted by the news source.

Kon added that if it becomes easy to interchange payment brands, cardholders may choose the card that provides them with the most benefits, which would put pressure on card companies to offer increased rewards for consumers. The brand that pays the cardholder the most would likely win out.

Visa is currently the dominant credit and debit card company, and it continues to jockey for increased brand loyalty despite the mobile wallet question marks. Visa recently extended its partnership with United Airlines to become the exclusive payment network partner for Chase’s sky miles prepaid rewards cards, which United offers to its flyers. 

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