Let’s declare uncertainty the winner in the mobile wallet wars.
Last week, at the BAI Retail Delivery conference in Washington, DC, at least one speaker declared: “The mobile wallet wars will be won and done within two years. You need to know your strategy now.”
The next day, PayPal, on its official corporate blog, declared: PayPal is not a mobile wallet. And in its posting, took pains to portray mobile wallets as a fool’s errand, a solution to a non-problem.
PayPal executive Anuj Nayar wrote:
I spend a lot of time thinking about this as we see everyone struggling with why mobile wallets do not seem to be exciting people as much as Internet shopping did in the 1990s. The problem is that mobile wallets don’t solve any customer pain points by themselves. They don’t offer intrinsic advantages over swiping a credit card or heaven forbid, paying cash. To gain mass adoption it has to be better, not just different, from what we do today. And your mobile phone just won’t cut it.
Who’s right: Nayar or the BAI speaker?
If you're a retailer, credit card issuer, or financial institution, here’s my advice: Go long on PayPal, despite the mounting pressures on your enterprise to stake out turf in the mobile wallet landscape.
Here’s the key question: Do customers truly want to use their mobile phones as payment tools? They have 30+ years of experience -- two generations -- using credit cards. They are very good at it. They know how to swipe. They know how to sign, be it on a slip of paper or a tiny screen. Few have ever paid anything with a tap of a phone.
Speaking of which, Apple has issued not one, but two iPhones in succession that lack mobile wallet functionality, and there is no roadmap that appears to have Apple putting a wallet in its phones anytime soon.
Yes, a legitimate mobile wallet -- Google Wallet -- is presently available on a number of Sprint phones, but it's only on Sprint, and adoption, suggest experts, has been paltry.
Go slow, pundits say.
“I am not bullish on mobile wallets,” Rich Aberman, COO at Palo Alto, Calif.-based WePay, an online payments company, told me. “I don’t think the value proposition is compelling enough for the consumer to want to change his behavior.”
Right now, said Aberman, the only winner in the mobile wallet space that he can come up with is Starbucks, which innovated with its app, and has now struck a deal with Square aimed at getting more java drinkers paying with a smartphone.
But one retailer does not a revolution make, and so far, there is scant movement to join Starbucks in the mobile wallet forefront.
“Mobile wallets won’t take off until we fundamentally change how we shop,” said David Eads, an Atlanta, Ga.-based mobility expert.
“The mobile wallet is only half of it,” Ron Herman, CEO of Atlanta-based mobile payments company SionicMobile, told me. “There have to be incentives for people to change their behavior.”
And maybe that is where the concept begins to get interesting. In an interview, Eads talked about tapping into the power of the smartphone -- its ability to know where a user is and thus what offers might most interest him or her. Tie in a loyalty card program in an app stored on the smartphone, and suddenly, the phone begins to have value as a shopping tool.
It's undeniably important for retailers and financial institutions alike to keep abreast of mobile wallet developments -- perhaps even having a written plan for rolling out a mobile wallet when the moment arrives -- but the word from experts is that taking no concrete steps right now is a safe and viable strategy for most organizations.
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— Robert McGarvey has been online and writing about the Internet for nearly 25 years.