Hailed as the next big breakthrough in digital technology making life simpler and easier, too many confusing choices and incompatible technologies may slow the growth of mobile wallets.
“Your wallet, without the wallet,”
is how Apple have chosen to describe Apple Pay, the in-built payment system that lets owners of Apple’s iPhone 6, Apple Watch and some iPad tablets make ‘tap and pay’ or online purchases with these devices.
Positioned as a virtual replacement for a leather or plastic wallet stuffed with cash, debit, credit and loyalty cards and paper receipts, mobile wallets are meant to let consumers simply carry just one device to both communicate and transact.
With technology researcher Gartner predicting mobile wallet transactions in the USA to grow to US$721 billion by 2017
, there is no shortage of companies fighting for a share of the mobile wallet market.
Apart from Apple, Google offers a similar service called Google Wallet. PayPal
allows customers to use its app as their mobile wallet, while Facebook
lets users of its Messenger app make payments to each other.
As at December last year, Apple claimed to lead the pack with $2 out of every $3 transactions by ‘tap and pay’ in the USA
made using Apple Pay. Despite all this activity, barriers have emerged which might hinder the broad adoption of mobile wallets.
The sheer size of the American market means the roll-out of payment terminals capable of handling mobile wallets is slow and costly. While consumers can pay ‘tap and pay’ using Apple Pay and Google Wallet at over 700,000 locations across the USA
, this is a small number for a nation of over 320 million people.
Mobile wallets are more complex than a physical one. Each mobile wallet is unique to the technology company offering it. Each has its own set-up process for storing card details, and each is slightly different to use when making a purchase. While Apple Pay and Google Wallet work like ‘tap and pay’ cards, PayPal
and Facebook Messenger
require both buyer and seller to have accounts with the same wallet.
People increasingly own multiple smart devices. Given that each device might have a different mobile wallet, this further complicates the decision to use one. Karen Webster, Chief Executive of Market Platform Dynamics wrote, “In 2014, the [Digitas] 17 country survey (including India, Australia, China, U.K., and the U.S.) revealed that consumers, on average, used 2.8 devices as part of their shopping experience. A year later, that number is now 5.
People change slower than technology
Finally, switching to a virtual wallet means unlearning and re-learning centuries of behaviour about how to secure money and make payments. Ajay Banga, chief executive of MasterCard, believes that this complexity and security concerns will make people think twice about using a mobile device as a wallet: “They worry about having everything on their phone – if you lose it, there's your whole life gone.”
Australia’s key players in the payment industry no doubt will continue to monitor these key trends in both the US and other overseas markets.
This article represents the views and opinions of the author and do not necessarily reflect the opinions of BPAY.
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