Why wallets went away
Remember when the mobile wallet industry was supposed to take the tech world by storm? Back in 2011, Google Wallet, Square Wallet, and PayPal Wallet all launched, essentially copycatting Amazon's mobile version of Payments, which debuted in 2009. Apple followed suit in 2012 by launching Passbook.
With so many major players invested in mobile wallets, we were supposed to be on the cusp of life-changing technology that would signal the end of credit card plastic. Some projections estimated the mobile wallet industry would topple $5 trillion by 2020.
But wallets have waned. Square recently announced it would discontinue Wallet. Rightly or wrongly, 63% of US consumers told Harris Interactive they would be uncomfortable using a mobile app that would store credit card information, allowing them to make purchases at a retailer as they would with a credit card.
John Haro explains
I spoke with John Haro, Chief Technology Officer at Vibes Media, a mobile marketing and technology company. Haro's got a deep background in digital marketing and mobile technology across everything from software engineering to data warehousing to mobile relationship management. He explained what's happening in mobile payments technology and what businesses should look for in terms of where mobile payments innovation is headed.
TechRadar Pro: It seems like excitement about mobile wallets died down in recent years. In 2010 and 2011 we saw a slew of mobile wallet/mobile payment launches and everyone was predicting the end of the credit card era.
However, we're all still using credit cards and the average consumer likely isn't getting rid of them any time soon. Were we all too enthusiastic about the speed to implement this technology on the business-side or did we overestimate the consumer's ability to adopt mobile payments?
John Haro: I think some overestimated the consumers desire to adopt mobile payment solutions more than their ability, and mobile payment providers have offered them no well designed solution. I can pay for my lunch just about anywhere with a credit card in less than 10 seconds because I do not have to sign and I don't care to get a paper receipt. With Passbook, Apple designed a great consumer experience for everything in your wallet, except payments.
I still think there is a lot to be excited about there, and I'm excited about ways that wallet providers can make payments invisible...a method so well designed that the payment just happens...as it does with services like Uber.
TRP: So what do the more niche mobile wallet companies like Square, LevelUP, and Loop do now? Is it about incentivizing adoption or do they have to move on to the next big mobile payments idea?
I assume, because your company, Vibes, works with mobile wallet providers like Google and Apple, that you're helping them to incentivize adoption by making mobile wallets more user friendly and more organic to how transactions are conducted.
Haro: Current mobile payment systems tend to be solutions to problems that do not exist in that it has to be easier than swiping a plastic card. However, with recent security breaches at major retailers many understand that the plastic card with a magnetic stripe is a serious security problem. Focusing on innovation and design of the consumer experience is the solution.
Mobile wallets might be more secure than plastic
TRP: I'm glad you brought up security. The recent Target breach, during which 40 million credit and debit cards numbers were accessed, occurred because point-of-sale terminals were infected by Malware.
I would assume that most retailers and consumers are concerned about securing their data on mobile devices, but based on what you're telling me, mobility done correctly might actually solve a lot of the security worries we currently have. Is that correct? How so?
Haro: Yes, that is correct. A credit card can be stolen (physically or digitally as with Target), copied a hundred times and sent all over the world. Alternatively my phone can connect a person with their bank or a retailer or another person in a direct and far more secure way. We carry no physical piece of material or device more personally tied to our identity than our phones.
TRP: So what other cool kinds of things should we be looking out for when it comes to mobile payments? For example: What should my enterprise readers be looking forward to in terms of innovation? What's possible for them today? What will be possible for them in the near future?
Haro: While the mobile payment wars rage on, the non-payment side of wallet is here now and rapidly gaining popularity. While effectively replacing a plastic credit card is complicated, replacing things like store loyalty cards is easy and consumers love the experience. We have innovated a lot on this front, and innovation from players like Apple and Google keeps moving forward...
...Two big events (Apple's WWDC and Google's I/O) are around the corner and there should be some interesting announcements in this area from both camps.
TRP: Tell us a little bit about mobile loyalty. What can brands do on the mobile loyalty front, aside from ditching the loyalty card?
I used to cover the CRM industry back when smartphones were first gaining popularity, and the messaging at that time was: "Right message, right person, right time." But that's got to be played out by this point. What's the next level of mobile service and mobile marketing and how can organizations capitalize on it?
Haro: There is more to mobile wallet loyalty than simply replacing a plastic card. On the phone, your mobile loyalty card is a living "object" connecting consumers to a brand they care about. This technology lets any retailer have an App-like loyalty experience that goes beyond the right message at the right time and adds in the dimension of location and micro-location (with things like iBeacon).
This "app-like experience" can be deployed at a small fraction of the cost of building a native mobile app, and can be distributed through text, email, or directly from your website. It is a great experience for consumers and a cost-effective technology with a fast time-to-market for brands and retailers.
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