Chatter about mobile wallets used to be pretty abundant in and around the blogosphere, though the discussion seems to have taken a seat on the backburner as of late. I first started chronicling my musings on The War of the Wallets back in December 2011 and wrote an Update from the Trenches back in August 2012. For better or worse, we haven’t seen much activity since then and I’m wondering why. It seems that mobile wallets have temporarily become zombies: something in between living and dead.
There are a number of various combatants in the war of the wallets, some bigger than others. As the lines are drawn on the battlefield today, I see three major contestants who have the ability to bring the mobile wallet into fruition: Google, Apple, and possibly PayPal. Square is vying for a spot at the table, and there are a handful of other companies that struggle to make a mark. Dunkin Donuts even started its own mobile payment system, but the company seems to lack the steam needed to push its payment platform into ubiquity.
The bottom line is that every version of the mobile wallet seems to be dependent on the smart phone—specifically near field communications. And unless “they” (the Man) start installing microchips under our skin, the success of the mobile wallet depends on moving the functionality of the wallet over to something else everyone uses. The most likely candidate is the smartphone, since that’s probably the second most common item you’ll find on a person at any given time. NFC makes the phone an easy-to-use payment system, and seems like it can be implemented easiest. But where is the damn thing? You’re guessing is as good as mine.
While companies like PayPal and Square have the focus to dominate this arena, I haven’t seen much progress from them yet. Square is heralded as the savior of small business, giving individuals the ability to process credit card transactions on their smartphone and tablet devices. The problem: it still requires a physical swipe, and this war is all about eliminating that process.
Intermediary Solution #1: The Consolidated Wallet
While many of us eagerly await the day we can reclaim out back pocket, there are a few companies that are trying to at least slim down your wallet. One standout company in this gambit is Wallaby. Wallaby is a pretty new startup that has developed a single credit card that is linked to all your other credit cards. In addition to removing a handful of individual cards from your wallet, Wallaby also determines which card is the best to use for any given transaction in an attempt to maximize your reward points.
I like the idea, but unless you’re spending an ungodly amount of money on consumer purchases, Wallaby may leave you with a handful of relatively insignificant rewards instead of one big (although not “maximum”) reward. For example, you may have $100 on your Visa, MasterCard, and American Express respectively, instead of $260 on your American Express. I don’t know about you, but I feel I could do better with a larger reward over several smaller ones. To further complicate things, the face value of a particular reward may not be as much as another card offers, but there are special redemption periods where you can exchange rewards points for other things, like frequent flier miles, at very favorable rates.
Intermediary Solution #2: Virtual Currency
Not really a mobile wallet, nor a wallet consolidation, another direction some companies are taking is towards implementing virtual currency. This is sort of like buying rewards points you earn on your credit cards. Facebook has its own virtual currency, or it did last I saw anything, where you can trade real dollars for Facebook currency. Facebook currency lets you buy things like virtual gifts and feed for your Farmville livestock. While I don’t see this as supplanting your wallet in the near future, it could eventually lead to its own payment system.
Everyone has a Facebook profile, and if Facebook could adjust its profile pages/mobile app to hold banking information it could then relay that through an NFC chip in your phone. Facebook also holds detailed profile information, which could be supplemented with driver’s license numbers, real addresses, and other tidbits that would give a retail store/online store all the information it needs to process your transaction. Maybe we’ll start seeing a “pay with Facebook” feature added to ecommerce shopping cards sometime in the future, similar to how we do with PayPal.
Amazon recently announced it too will be offering a form of virtual currency: Amazon Coins. These coins are accepted at Amazon’s kindle store, and Amazon said it will be giving away millions of coins to help fuel activity within its ecosystem; an Amazon stimulus package for itself. We’ve seen Amazon subsidize itself in the past, when it was selling Living Social deals for Amazon gift card dollars as less than face value.
I don’t seem Amazon as a long-term contender in the mobile wallet arena, but Amazon surprises me and this may not be out of the realm of possibilities.
Skepticism: The Future Isn’t That Cool
Maybe mobile wallets aren’t as cool as we think. Sure there are lots of possibilities for companies to take on more data about consumer behavior, but what’s in it for me? I may save some space in my back pocket (I use a rubber band and keep my cards and driver’s license in my front pocket) but the wallet is something that is held dearly across several generations. Is the juice worth the squeeze for companies to push the idea of mobile wallets on a reluctant population? Money is a personal thing, and breaking the physical connection to payment will prove difficult.
Nassim Taleb, a self-proclaimed futurist and someone I regard as very intelligent, also brings up an interesting point that is tangentially related here: The Future Will Not Be Cool. He argues that most everything we hold dear as futuristic isn’t much different than it was in the past. Taleb offers some interesting imagery to this point:
“Tonight I will be meeting friends in a restaurant (tavernas have existed for at least 25 centuries). I will be walking there wearing shoes hardly different from those worn 5,300 years ago by the mummified man discovered in a glacier in the Austrian Alps. At the restaurant, I will be using silverware, a Mesopotamian technology, which qualifies as a “killer application” given what it allows me to do to the leg of lamb, such as tear it apart while sparing my fingers from burns. I will be drinking wine, a liquid that has been in use for at least six millennia. The wine will be poured into glasses, an innovation claimed by my Lebanese compatriots to come from their Phoenician ancestors, and if you disagree about the source, we can say that glass objects have been sold by them as trinkets for at least twenty-nine hundred years. After the main course, I will have a somewhat younger technology, artisanal cheese, paying higher prices for those that have not changed in their preparation for several centuries.”
Now imagine that he pays for that mea using his smartphone, instead of gold cobs, or cash, or a credit card. Mobile Wallets don’t seem so earth shattering anymore do they? At least not in the big scheme of things. Maybe Google is happy they know you like to drink Merlot when you eat steak – and can recommend a vintage you may like, a personal trainer, nutritionist, and cardiologist to offset the 10 pounds of red meat you eat every week (and maybe even hike your health insurance premiums), but what does that do for you, the consumer?
Taleb continues, noting how technology seems to capitulate. For example, after shoe companies spent millions of dollars engineering the most comfortable, supportive shoe ever, that many people are taking a step backwards and embracing those goofy looking “barefoot style” Vibrams, which offer little more than a protective barrier between your flesh and the ground. Apparently they are quite good for you…
In Taleb’s article, however, is a glimmer of hope for the mobile wallet: the idea that advances in technology are beneficial insofar as they eliminate mundane processes; so-called “invisible” technologies. For example, the Internet has made the bureaucrats’ jobs a little more palatable. Twitter has saved people lots of time waiting in call lines to air their grievances about customer support. Maybe mobile wallets have the potential to do that, but replacing a card swipe with a phone swipe doesn’t seem like it’s making my life that much easier.
So, I ask you this: Are mobile wallets really that cool? Is it something we should be biting at the bit to get? If the technology and infrastructure were instantly available today, would you make the switch? Let us know what you’re thinking in the comments below.
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