Mobile Wallets: The Next Big Thing?
|May 27, 2011|
My sister Kim has a classic case of ADHD, and she is always forgetting her wallet. She often zooms from one room to the next, absorbed in whatever task or great big plan she has on her mind, and leaves a trail of personal belongings in her wake: Wallet, keys, hair band, hair brush, shoes …
She has locked herself out of her car so many times that she has perfected the art of opening the car door with a clothes hanger. And when she got married two weeks ago, her infinitely patient lover promised in his vows that every time they left a room, he would recite the same checklist he has uttered for the last six years: “Cell phone … wallet … keys.”
But if mobile wallets actually start to take hold in the U.S. in the next couple of years, my new brother-in-law may finally be able to shorten that list.
Yesterday, Google set the media and tech worlds buzzing again with its announcement of a new application for Android phones called the Google Wallet. The new app will allow Android users like my sister to pay for goods and services with a quick wave of their cell phone and leave their heavy leather wallet at home (a nice perk for the more scatterbrained among us).
Google isn’t the first U.S. company to introduce a mobile payment system for smartphones, but its stature is big enough to send enough tsunami-size waves across the payment industry to help keep the mobile wallet momentum moving. (Nevermind that the company’s PR bonanza on Thursday was thrown under the bus less than 24 hours later by PayPal, which has accused Google of stealing major trade secrets.)
Earlier this week, the mobile startup Square also added to the mobile payment momentum when it announced a new mobile wallet system called Card Case that will allow iPhone users to “open a tab” with a favorite merchant and after an initial swipe with old-school plastic, pay for the rest of their transactions with their phone. In a press release, Twitter founder Jack Dorsey called the new service revolutionary. “We’re transforming everyday transactions between buyers and sellers into something special,” said Dorsey. “Card Case goes beyond point of sale to transform the entire buyer-seller relationship.”
Meanwhile, Visa announced earlier this month that it, too, is jumping into the mobile wallet waters. “Visa and our subsidiaries are working with financial institutions, merchants, mobile network operators, and innovative technology providers to bring new ways to pay and be paid to more consumers and merchants around the globe,” said Visa Chairman Joseph W. Saunders in a press release.
But are U.S. consumers ready to leave their leather wallets behind? According to a MasterCard survey released last week, the answer is: Maybe – depending on their age. According to the survey, 63 percent of consumers, aged 18 to 34, say they would be happy to make purchases with their smartphone. But only 37 percent of consumers aged 35 or older said the same, meaning: It may take a generation before mobile wallets become commonplace.
At the same time, experts say that U.S. merchants will need to buy in to the mobile wallet momentum too if mobile payments are going to go from big idea to practical commodity. After all, if you can’t use your mobile wallet at more than a handful of retailers, then it’s probably not a good idea to leave your traditional wallet at home.