I’m on You and Yours later today talking about mobile wallets, a topic with which I’m very familiar thanks to my friends at Penrillian.
The ‘Mobile Wallet’ is something of an inevitability for me — so much so that the clutches of leather in which we bundle up our cards and cash will seem as much of an anachronism to my kids as CDs, FM radios and my dress sense.
The term ‘Mobile Wallet’ is used today to describe a number of different pieces of software, but what it should be is a soft analogy for today’s back pocket hardware: a means of collecting, managing and selecting from your different payment options, whether you are purchasing online or on the high street. It should be independent of your means of payment, so that you can still have a ‘credit card’ from Barclays alongside your current account from the Co-op and some ‘cash’; it’s just that all of these will be virtual.
Physically representing these different means of payment just doesn’t make a lot of sense anymore. Take the credit card: if you were a bank, would you choose to:
a) post millions of plastic cards loaded with expensive chips to your customers, leaving them exposed to theft and interception along the way, or,
b) electronically enable a mobile device to make payments over the Internet?
And as a consumer, would you prefer to
a) carry around cash, credit cards, travel cards and endless loyalty cards, or,
b) have it all integrated into one simple device?
Now the downside with the mobile wallet is that you have a single point of failure: lose your phone and you can’t pay for anything or tell anyone about it. The upside: as soon as you can get online you can remotely cancel everything on it in an instant.
There are barriers to the proper success of mobile wallets — notably the operators like o2 and Orange. In their desperation not to be a ‘dumb pipe’, the mobile operators are very keen that they become the provider of your mobile wallet, keeping you that bit more tied in to your monthly mobile contract. But history shows that the operators rarely do the best job of providing services over the connectivity that is their core strength.
Instead operators need to forget about the applications side of the mobile wallet and focus on the less sexy but arguably more vital hidden pieces: the ability to securely provision payment services to the phone. Someone has to have a secure means of connecting to your device and telling it what it needs to know in order to make payments from your bank account. That is a natural role for the operator: they just need a means to make money from this service.
In one form or another, a digital means of payment that we can manage on the move will replace the tired packages of plastic and paper we carry around today. For me it’s just a question of when.