Mobile wallet wars aren't actually so heated, panel says

Mobile wallet wars aren't actually so heated, panel says

Summary: Most mobile wallet and payments executives acknolwedge that there are going to be many different options available when the space takes off.

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TOPICS: CXO, Mobility
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SAN FRANCISCO -- Mobile payment solutions are few at the moment, but that will surely change in the next couple of years, according to panel of e-commerce and tech executives at the Open Mobile Summit on Wednesday.

But don't expect a giant war of mobile wallets just yet. Most of the panelists generally agreed that there might room for multiple solutions depending on the varying needs of consumers and merchants.

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"It's kind of like 1994 and we're calling it the 'website wars,'" said Osama Bedier, vice president of payments at Google. "I believe there will be multiple wallets, and I think that's good for consumers, good for the space."

Inevitably, the solutions that consumers will react to are what will drive adoption, he added. From a Google perspective, Bedier explained that his team is looking at building richer experiences, saving time (i.e. skipping the line at Starbucks), and fulfilling consumer needs.

Visa's global head of mobile, Bill Gajda agreed that there will be a number of wallet strategies as the market grows.

"But for the vast majority of merchants, it's going to be based on the vast broadness of the commerce experience," Gajda posited, explaining that there will also be certain categories of merchants (i.e. mass transit agencies) where speed will drive a real desire for -- and even need for -- mobile wallets.

Gajda offered a couple more reasons as to why mobile wallets are starting to grow: the cost of infrastructure is coming down as well as the broader business case where merchants can have more real-time, richer experiences with customers driven by mobile technology overall. He also threw in that Visa recently introduced an incentives plan for merchants who are proactive about installing the technology.

Dickson Chu, managing director of global enterprise payments at Citi, asserted that from Citi's standpoint, at a really kind of minor level, it's really just an evolution from paper and plastic, to ATMs, to e-commerce, and now mobile.

"A lot of our customers conduct their everyday life on this rich, powerful device (the smartphone)." Chu said. "That's becoming a point of transaction. Our customers are engaging in that so we want to be apart of that."

Nevertheless, when it comes to consumers (at least in the United States), many of them prefer to stick with just one vendor in a particular industry.

"We're going to have multiple wallets offered to us, but as individuals, we're each just going to pick one," predicted David Marcus, PayPal's vice president of mobile. He added that at the end of the day, people are just replacing plastic via a card with silicon on a smartphone.

"Merchants are experiencing more and more of the multi-channel reality," Marcus asserted, whether it be online, in-store and beyond, explaining that they want to enable features to know their consumers better.

But Chu pointed out that not every merchant is engaged in the kind of business that is driven by offers and the like, and for them, driving more discounts is just the way to the bottom.

Bedier argued that what will happen is more simple than that: Merchants will respond to whatever generates sales and how efficiently it does that.

Naturally, when it comes to anything related to mobile payments these days, the discussion turned to near field communications (NFC) technology.

Gajda pointed out PayWave as a product that is focusing on this for the near-term. Although it's generally not used by even close to the majority of consumers -- either in the U.S. or worldwide -- Gajda theorized that mobile wallets have the potential to go where physical cards don't today.

Bedier later added that NFC is a type of technology that fills a very unique gap -- not to mention it's the power behind Google Wallet.

A primary example of where NFC could really make a difference would be person-to-person payments, which still mainly take place via cash or check. For the time being, mobile person-to-person is a payment method that doesn't really exist yet, with the exception of third-party and accessory solutions from developers such as Square.

PayPal, for the most part, has been skirting around NFC and made it clear that they have other solutions that could work just as well -- at least for the near future.

"If NFC works, great. If not, we'll have other methods of payment available for customers," Marcus said, "We're not going to wait until NFC comes of age. There are so many industry companies that are looking at this in different ways."

UPDATE: David Marcus of PayPal asked to clarify context on his comment about plastic/silicon. He tells us that he was making the point that this is NOT PayPal’s approach, that this is what others are offering, and PayPal believes that the wallet in the cloud is the solution that will be best for consumers.

Topics: CXO, Mobility

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6 comments
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  • RE: Mobile wallet wars aren't actually so heated, panel says

    I already have a mobile payment solution. It's thin, made of plastic, and easily fits in my wallet. I don't need NFC added to my phone so that it can be more easily hacked. NFC is a useless solution to a non-existent problem.
    BillDem
    • Agree 100%

      @BillDem There is nothing more mobile than a credit card.

      NFC is a privacy security nightmare in the making.
      wackoae
    • RE: Mobile wallet wars aren't actually so heated, panel says

      @BillDem

      Men usually have 3 items (wallet, keys, phone) but only 2 useful pockets. If 2 of them were combined that would be perfect. One item in each pocket. NFC is only not as useful to Women and Metrosexuals who like carrying around a purse.
      SeedlessMango
  • So what's the problem that they're trying to solve?

    You have to start with requirements (as always). As BillDem says, our starting point is a plastic card with no OS and no moving parts. They're going to have to go some, to improve on that...
    peter_erskine@...
  • RE: Mobile wallet wars aren't actually so heated, panel says

    While I sympathise with BillDem as simpe solutions are always better, I think this is more reducing the amount of crap we have to carry around.<br><br>My WP7 phone now works as my phone, email, net access, games, music, navigation etc. If it also works as my wallet, credit card and drivers licence then I'm feeling lighter already.<br><br>Those thin plastic cards are already insecure, with tech approaches cloning them and physical methods just copy down the numbers, expiry date and check number and the phone and Internet await. I recently got $800 removed from my bank account through a skimmer attached to a bank ATM.<br><br>Unlike Rachel, who I'm sure has the usual black hole of a handbag (apologies for the stereotype), men are limited to pockets and just having to carry a phone (a slim, light modern one, rather than the heavy, fragile, other one with its iCase) is the thing to aim for <img border="0" src="http://www.cnet.com/i/mb/emoticons/wink.gif" alt="wink">
    tonymcs@...
  • Better tell all those Africans, Haitians and Filipinos...

    "For the time being, mobile person-to-person is a payment method that doesn???t really exist yet, with the exception of third-party and accessory solutions from developers such as Square."

    Except they DO exist -- everywhere. They're quite common in Africa and Asia using SMS text messaging via feature phones over networks like M-Pesa. What most don't realize is that from the standpoint of adoption, the U.S. is well behind developing economies where payment options are few. I get that this is a story about the mobile wallet in the U.S., but it fails to bring in any context from other markets that are making simple mobile payment methods work and work well.

    And BillDem is simply wrong about the security issues related to NFC. It is a much, much safer method than plastic. The card he carries is already a security nightmare. (Go ahead: Google 'credit card fraud ring.') Will NFC or the Secure Element in phones be hacked? Probably. I'd never bet against thieves. But what makes NFC, and the security built into mobile phones so far superior to credit cards, is that even if NFC gets hacked somehow, it will mean that theft will have to take place one phone at a time. The massive fraud that is possible now with plastic would be impossible.
    jmwester