With mounting pressure on banks to establish their own mobile wallets before nonbank providers overwhelm the market, one financial institution claims to be the first bank to partner with a Google Inc.-funded wallet.
Sovereign Bank N.A. intends to entice customers to obtain a Sovereign Debit MasterCard or use it more often by linking it to a LevelUp mobile-wallet account, the bank announced June 4.
Google Ventures last year invested $5 million in SCVNGR, a Cambridge-based digital game and social-network company that created LevelUp nearly a year ago as its mobile-payments unit. Sovereign touts LevelUp as the nation’s second largest mobile-payment network.
Operating with a free smartphone application that establishes barcodes specific to each customer that link to bank accounts, LevelUp quickly expanded into San Francisco, Philadelphia, New York City and Boston after initial testing last October (
At that time, analysts began speculating that LevelUp’s game-like approach to shopping, in which consumers unlock better discounts as they shop through the software application that supports payment from any credit card and tracks merchant incentives, would complement the Google Wallet well (
Boston-based Sovereign plans to promote its LevelUp “First in Mobile Wallet” campaign through Aug. 31 during the Boston Harbor Association’s “Summer on the Waterfront” promotion with advertisements featured on subway trains, bus lines and the Boston Globe magazine, the bank stated in a press release.
Consumers may pay with their Apple Inc. iPhones or Google Android handsets after downloading the free LevelUp application and linking it to their debit or credit cards, the bank said. They initiate purchases when scanning their LevelUp barcode at the payment terminals of businesses accepting LevelUp.
In turn, businesses can send messages to LevelUp users offering a first-time bonus to try the store and incentives to join loyalty programs, the bank noted.
The bank’s promotion offers $10 to spend at any of LevelUp’s 2,500 businesses to the first 20,000 LevelUp users who link to the bank’s debit MasterCard.
Sovereign and Santander Consumer USA operate as units of parent Banco Santander S.A., itself a unit of Boston-based Santander Holdings USA Inc.
Santander executives did not respond to PaymentsSource inquiries by deadline, but the bank did mention in the press release that the partnership with LevelUp would be a positive customer-service development.
"Mobile transactions are emerging as the preferred payment method for quick, on-the-go purchases,” Eduardo Tobon, head of Santander’s U.S. Cards division, stated in the release. “Our exclusive promotion with LevelUp offers an innovative and rewarding mobile payment option that will build long term loyalty among our cardholders."
Sovereign is making a wise move in stepping forward with a mobile-wallet partnership to take advantage of LevelUp’s digital marketing expertise, Richard Oglesby, senior analyst and mobile pay expert with Boston-based Aite Group, tells PaymentsSource.
However, banks should get even more proactive in developing plans to achieve “top-of-wallet status” with their payment cards in a field crowded with mobile-wallet providers and options, Oglesby contends.
The “First in Mobile Wallet” campaign helps Sovereign promote its own debit card, but it may be more important for Sovereign, and banks in general, to establish an open-loop mobile wallet, Oglesby suggests.
“The concept of open loop has to come into play to make this all work for the banks,” he adds. “It would allow banks to get involved with all of these players [in mobile-wallet development].”
This week’s announcement comes as consumers are becoming more willing to consider mobile wallet offerings from nonbanks (
What do you think about this? Send us your feedback.
