Latest / Franchise Conversations with Fexingo: Buying, Running, and Scaling Franchise Businesses / How Franchisees Are Using Mobile Wallets to Boost Revenue
Transcript
- Lucas: So there's this data point that's been bouncing around my head — mobile wallet transactions in US retail hit $350 billion last year, and that's projected to grow another 30 percent this year. But what I find really interesting is how franchisees are using them not just for convenience, but as a revenue lever. Luna: I've seen the numbers too. But how does a payment method actually drive revenue? I mean, it's just a different way to swipe a card, right? Lucas: Yeah, that's the first assumption a lot of franchisees make. But the data tells a different story. Take the case of a mid-sized fitness franchise — let's call it a regional chain with about 30 locations. They integrated Apple Pay and Google Pay at all their front desks and point of sale terminals. Within six months, their average transaction value jumped 12 percent. Luna: Twelve percent? That's significant. Was it the speed of checkout, or something else? Lucas: That's the fascinating part. At first, everyone assumed it was the speed — faster checkout means less impulse decision-making time, you know. But when they dug into the data, they found that mobile wallet users actually spent more per visit whether the line was long or not. So it wasn't about speed. It was about psychology. Luna: Psychology — like the friction of pulling out cash or a card makes you think twice, but with a tap it's almost subconscious? Lucas: Exactly. There's research from the Journal of Consumer Research showing that when people pay with a mobile wallet, the pain of paying is lower. The transaction feels less 'real' than handing over cash or even swiping a card. So they're more willing to add that extra protein shake or buy the premium class package. The franchise saw a 15 percent uptick in add-on sales specifically from mobile wallet users. Luna: And that's the kind of insight that's worth paying attention to. You know, if these conversations have moved your work forward in some small way, listener support is what keeps this show ad-free and independent. We keep this podcast going because of people like you. If you'd like to help, you can buy us a coffee — literally — at buy me a coffee dot com slash fexingo. All lowercase. It helps us keep doing deep dives like this one. Lucas: Yeah, and we really appreciate it. So, back to the psychology — the other angle is loyalty integration. Most mobile wallets let you store loyalty cards, and some franchises are tying the payment and loyalty into one tap. Luna: That's smart — you're not just making payment easier, you're making loyalty effortless. One less thing for the customer to think about. Lucas: Right. And that drives repeat visits. The same fitness franchise saw a 20 percent increase in repeat visits among customers who linked their loyalty account to their mobile wallet within the first three months. The convenience becomes a habit. Luna: But there must be some downsides. Transaction fees, for one. Apple Pay and Google Pay still charge the merchant a small percentage. Lucas: Yeah, typically around 0.15 percent to 0.25 percent more than a standard card swipe, depending on the processor. But the franchise we're looking at crunched the numbers: the incremental revenue from the higher average ticket more than covered the extra fees. Plus, they reduced cash handling costs, which is a hidden win. Luna: And what about data? Mobile wallets give you a lot more information about customer behavior, but there's privacy concerns. Lucas: That's a valid point. The franchise in our case was careful — they only used aggregated, anonymized data to identify trends, not individual purchase histories. But some franchisees are going further, using the transaction data to send targeted offers. For example, if someone buys a smoothie every Monday, they might get a discount on a Monday class. That's powerful, but it requires clear opt-in policies. Luna: So what's the key takeaway for a franchisee thinking about implementing mobile wallets? Where do they start? Lucas: First, check if your point of sale system is compatible. Most modern POS systems already support NFC — near-field communication — but you might need a software update. The upfront cost is minimal, usually just a few hundred dollars per location for terminal upgrades if needed. Then, train your staff to mention it at checkout — a simple 'you can tap your phone or watch' reminder increases adoption significantly. Luna: And they should track average ticket size before and after, segmented by payment method, to see the real impact. Lucas: Absolutely. And don't forget to integrate your loyalty program. The combination of frictionless payment and automatic rewards is where the magic happens. I've seen franchisees in other verticals — like quick-service restaurants and car washes — report similar gains of 8 to 15 percent in average spend. Luna: It's interesting how something that seems like a tech convenience actually changes consumer behavior in a measurable way. It's not just about speed — it's about the psychology of spending. Lucas: Exactly. And as we move into the second half of 2026, with mobile wallets becoming even more ubiquitous, franchisees who don't offer this option might actually be leaving money on the table. It's one of those low-hanging-fruit changes with a surprisingly high return. Luna: I'm curious — are there any verticals where mobile wallets don't make sense? Like, high-ticket items where you want the customer to feel the pain of paying? Lucas: That's a good question. Some luxury franchisees, like high-end auto detailing or premium pet services, have actually held back because they want the customer to have a deliberate moment of purchase. But even there, the data is starting to shift. A car wash franchise I spoke to said mobile wallet users actually bought the most expensive wash package more often because the one-tap payment made upgrading feel less significant. Luna: So it's almost universal then. Any final advice for a franchisee who's on the fence? Lucas: Start with a pilot in your busiest location for one month. Measure average ticket, transaction count, and repeat visit rate. Compare it to a control location. The data will likely speak for itself. And if it works, roll it out system-wide. It's not a huge investment, and the upside is real. Luna: I think that's a solid plan. Thanks for breaking it down, Lucas. Lucas: Always a pleasure. That's our show for today — we'll be back next time with another conversation on the business of franchises.