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.
Maybe this is another of those things where we have to wait and see what happens before making any judgements. But I'm with you on this one. I certainly don't feel a need to switch at this point, seeing as not all establishments support mobile wallet payments. Also, I still prefer using my credit card. Tried and tested, comfortable with the tech, and most (if not all) establishments accept it.
Nothing against mobile payment systems, though, but it's just not my cup of tea.
Other than the novelty, there's doesn't seem to be any compelling reason to switch at this point. Of course, I can remember back when credit cards started, and I reasoned as a teenager that they would surely go out of business. My thinking at the time, was "why would anyone want to pay interest on all those credit purchases?" I guessed wrong on that one.
@Mashka I know what you mean about stepping back to the past. An example in the US (at least in NY) is gas stations going back to charging different prices for cash and credit card purchases (usually around 10 cents more per gallon for credit card). The big sign with the prices always shows the cash price, and sometimes you only notice when you get to the pump that there is another price for those who choose to pay with plastic. While this was common in decades past, it had just about disappeared until gas prices started climbing and gas station owners wanted to recoup the 2 -3% they pay the credit card companies.
I'm so used to paying with a credit card myself now that I resent having to pay for the convenience.
I live in Germany right now and recently I have found out, that everytime when I pay with me debit card in the stores, the bank charges me!!! Not much, around $0,25, but still! And I got used to pay with my card- so now, to save money I need to pay with cash and it means, we are getting back to the past.So, the mobile wallet could be a good idea as soon as people realize that it's much more comfortable than other payment methods
@Mashka you're absolutely right. Much has to do with what we're used to. So long as the technology is marketed effectively enough to get people to try it and stick with it a while, it can become routine.
Have to agree with Mitch here. If I am going to switch to Mobile Wallets, then I need to see something tangible in the way of "what do I gain from the switch."
If the answer is "not much" as it seems to be, then why not just stay put?
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