Unlocking Merchant Wallets 2.0 – from loyalty to leverage

Arda Cagaptay, Founder of Fintech in Motion (FIM), delves into Merchant Wallets 2.0 and what they mean for merchants and the next era of commerce.

As wallets evolve from checkout tools into strategic platforms, a new model is emerging – Merchant Wallets 2.0. In this exclusive interview, The Paypers sits down with Arda Cagaptay, fintech strategist, speaker, and founder of FIM, a fintech infrastructure for merchants, to unpack what this next wave of wallet innovation means for brands, customers, and the future of commerce.

What exactly is Merchant Wallets 2.0, and how does it differ from traditional wallets?

Merchant Wallets 2.0 turns a brand’s app into a full-stack engagement engine. Traditional wallets mostly do two jobs: they store credentials and speed up checkout. Useful but narrow. Wallets 2.0 fuse identity, loyalty, offers, stored value, subscriptions, Buy Now, Pay Later (BNPL)/credit, receipts, returns, referrals, tipping, and post-purchase service into one programmable surface that belongs to the merchant.

Think of Wallet 1.0 as a speedy turnstile at a stadium entrance that lets people in fast. Wallets 2.0 are the whole stadium OS: ticketing, concessions, seat upgrades, replays, sponsor perks, and transport. Every interaction creates value for the fan and margin for the venue.

Practically, this means a grocery wallet that prices dynamically by member tier, nudges to cheaper rails at checkout, and turns e-receipts into ‘actionable service’ (returns, warranties, reorder). A QSR wallet that treats points like programmable currency across breakfast, lunch, delivery, and kiosks, while AI balances the offers against food cost and kitchen load. A fashion wallet that links together size history, alterations, and resale so that returns fall and exchanges rise.

Critically, Wallets 2.0 run on consented first-party data: customers opt into value, merchants orchestrate payment, identity, and loyalty without surrendering the relationship to a third party. That unlocks profitable personalisation (context, not creepiness), rail routing that protects margin, and post-purchase journeys that keep customers in the brand’s orbit.

Merchant Wallets 2.0 don’t just finish a transaction; they start a relationship flywheel where every tap earns, learns, and returns value.

How are merchant wallets redefining customer engagement in a post-checkout world?

The shift is from ‘thank you, goodbye’ to ‘welcome to the programme’. In Wallet 1.0, Starbucks set the pattern: stored value, stars, pre-order. Wallets 2.0 extend that playbook beyond prepay and perks into ongoing monetisation loops, such as referrals, tipping, subscriptions, memberships, community drops, and service.

Take agile players like Compass Coffee: they’ve shown how a wallet can stimulate behaviours after the sale: send a friend an offer, tip a favourite barista, subscribe for weekly pickup, or unlock limited roasts. Each action compounds loyalty because it’s native to the customer’s daily rhythm, not bolted on.

In Wallet 1.0, engagement was a punch card. In Wallets 2.0, it’s a role-playing game where customers level up through missions (they try new categories, book off-peak, opt for pickup, recycle packaging), and the wallet rewards exactly the behaviours that help the merchant’s P&L.

Because the wallet owns identity, payment, and loyalty, it can orchestrate smart offers (margin-aware) and smart rails (cost-aware) with smart timing (context-aware). Post-checkout becomes the main stage: returns are frictionless, exchanges are encouraged, resale is integrated, referrals are gamified, and subscriptions are right-sized. The result is higher LTV, lower churn, and a customer who feels seen, not sold to.

What competitive edge do merchant wallets offer over third-party wallets in terms of data ownership and retention?

When you rely on third-party wallets, you rent the relationship. You get the authorisation but lose the storyline. Merchant wallets flip that: you own the consent, the context, and the continuity. You don’t just know who paid; you know who browsed, wish-listed, paused, redeemed, referred, tipped, returned, or resold, and you can respond in-flow.

This behavioural graph is the bedrock of true personalisation. To exemplify, a grocery wallet sees that a family’s weekly basket skews toward gluten-free; the next visit, it proposes a bundle swap that keeps margin intact and adds a recipe. A fashion wallet notes repeated size exchanges; it proposes virtual fitting guidance and a free alteration, reducing returns while delighting the customer. A QSR wallet senses kitchen overload at 12:30 and shifts incentives to pick up at 12:50, smoothing operations without harming NPS.

Third-party wallets aren’t designed for these micro-optimisations because they sit outside the merchant’s P&L and can’t read inventory, capacity, or category margin in real time. They are brilliant at universal acceptance, but are not built to run your business.

Owning the wallet also fortifies retention. You can build member-only surfaces (early access, guaranteed slots), issue programmable value (points, credits, time windows), and run closed-loop measurement (from impression to basket to return). With consented first-party data, you comply with privacy rules while avoiding cookie collapse and ad-tax dependency.

Third-party wallets are like selling through a bustling marketplace: you get foot traffic but little control. A merchant wallet is your flagship store: you set the experience, capture the data, and keep customers coming back for the story only you can tell.

What role should payment providers and acquirers play in enabling wallet ecosystems?

PSPs and acquirers are perfectly placed to evolve from transaction processors to wallet enablers. They already manage identity, risk, routing, settlement, and compliance, the very muscles a Wallet 2.0 stack needs. The opportunity is to package these as merchant-branded capabilities, instead of generic checkout.

They should implement three strategies:

1. Abstract the rails: offer orchestration that routes across cards, account-to-account (A2A)/instant payments, Request-to-Pay, vouchers, and BNPL, choosing the optimal path per basket, risk, and UX. Wrap it up with transparent economics so merchants see margin impact, not just authorisation rates.
2. Embed loyalty/value: ship SDKs/APIs for stored value, points-as-currency, digital gifts, subscriptions, and refunds-to-wallet. Pair this with tokenized identity, so rewards apply across channels (app, web, POS, kiosk) without brittle integrations.
3. Operational intelligence: provide real-time risk and capacity signals to let the wallet nudge behaviour (pickup windows, delivery slots, smart tipping, alternative items). Expose event streams so merchants can personalise without building massive data plumbing.

Commercially, this shifts PSPs from per-transaction rents to shared LTV.

As an analogy, if the merchant wallet is an EV, PSPs are the charging network and the navigation: invisible when it works, and invaluable because it optimises cost, safety, and speed. Providers that stay ‘just pipes’ will be commoditised, while those that become co-pilots will sit inside the merchant’s strategy, not just their checkout.

How can mid-sized merchants adopt Wallets 2.0 without the resources of the likes of Starbucks?

Start with a modular, measurable, and merchant-branded approach. You don’t need a super app; you need a stack that composes ‘brick-by-brick’. That’s why we built FIM (the infrastructure) and Fimo (the AI layer): to let mid-market brands launch Wallets 2.0 in sprints, not multi-year programmes.

A pragmatic path to adoption could look like this:

Sprint 1

• Enable account, loyalty, and receipts across app/web/POS. 
• Issue digital receipts with instant return/exchange flows. 
• Treat points as currency at checkout (cash-mix). 
• Measure repeat rate and NPS.

Sprint 2

• Add referrals, tipping, and refunds to wallet.
• Convert cash-out refunds to stored value with a small bonus. 
• Launch a simple membership (free delivery windows, priority service). 
• Track breakage vs. re-spend.

Sprint 3

• Turn on rail orchestration (cards, A2A/Request-to-Pay). 
• Let Fimo suggest the best path per order (“earn 2× points if you pick up at 12:50”). 
• Measure basis-point savings and kitchen/load smoothing.

Sprint 4

• Pilot subscriptions or category bundles (e.g., lunch club, essentials pack). 
• Layer personalised offers based on inventory/margin signals.

Throughout, make sure to keep the wallet on brand: your colours, your tone, your perks, and use Fimo to make it conversational (‘apply my credits’, ‘skip this week’, ‘gift a friend’). Integrate lightly with existing PSP/acquirer and POS (no rip-and-replace).

You’re not building a skyscraper on day one; you’re adding sturdy floors. Each floor pays for the next via LTV lift and cost savings. With the right rails and an AI co-pilot, mid-sized merchants can act like super apps without the super budget.

About the author

Arda Cagaptay is a fintech strategist, speaker, and the founder of Fintech in Motion (FIM), a fintech infrastructure for merchants building the next generation of digital wallet ecosystems. With over 14 years of experience and more than 35 wallet deployments across global markets, Arda is a leading voice on Embedded Finance, merchant payments, and Wallets 2.0. He also runs Fintech in Motion, a mobility-driven initiative exploring innovation on the road across Europe.