Let's assume the world of mobile wallet is here, irrespective of when actually. Everything in your wallet is being replaced by a universal ID or bunch of IDs stored in your mobile phone or on a server that can be accessed by either a mobile phone or by another box that can talk wireless to the mobile phone. We are talking about replacing metro cards, medical cards, credit cards, debit cards, loyalty cards, cash oh! yes, and sooner or later the government issued license, with a digital copy(I do believe it is long time before the cards actually disappear). The rapidity with which these changes are being explored is quiet astonishing, maybe not to the Japanese but here in US this qualifies for crossing the chasm in a speed boat (well. I mean when we have reached the chasm that is). The transactions between consumers and vendors of all possible colors being carried out simply at a wave of the mobile device will have consequences and I am thinking about what is on the table for next few years.
Expect an M for Mobile logo along with Visa, Master cards, American express etc. The Discover and Iris are a good thing but the carriers are in business of networks and it is highly likely that they will have their own little wave through device, instead of a swipe magnetic stripe reader at point of sale. To lure the merchants they can give the small cellular box that latches on to the carrier's wireless network and has NFC built in for free. The details of rest of the payment processing are beyond the scope of this blog, but the carriers are capable of making money holding accounts for their network users(carrier billing is already a norm for some services), the issuance of "eCredit" can still go through normal banks. Although contact less payment POS that handle stripe are around, but if the carriers really want the piece of the pie, they will need to have control over transactions. This has obvious but serious consequences for the credit card(Visa, Master etc) and pin card (NYCE, Star etc) network providers. A lot depends on how fast the consumers will adapt mobile wallets and the marketing ability of carriers to sell their POS solutions. (I don't expect the payment networks taking this lightly or sitting down.)
The entry of another major player in form of cumulative power of carriers to provide mobile wallet services will result in increased competition in consumer credit market. The credit and related fees should get cheaper for consumers and merchants because to enter into the space the network service providers will have to entice merchants and consumers alike. There might be deals in near future that that will bundle the Mobile "E-Money" account and phone service account. Just like one can get a phone for free for two years service, we might see phone and mobile money account packages.
A boom in loyalty cards will come, even to the point where the deli next door and the fruit shop on the corner will have frequent visitor allowances. Right now my wallet can only hold so many cards and I really need to keep the obesity of my fat wallet checked. But with digital loyalty sky is the limit. Another reason of drive will be the carriers offering those services to the SMBs along with their Mobile POS.
Along with security there is the inherent issue facing any battery powered device; running out of power. Running out of battery - synonymous with running out of money is not very comforting to me. So I will need my phone never to run out of charge. Charging of phones will have to be available, what is the alternative, the banks will have universal charging stations, the ATMs will also come with NFC and you can charge your account and phone(naw, just account), the powermat will take off, solar batteries will become popular, the "charge sticks" will gain market and finally charge through WiFi will be available in smartphones. I can't say for sure which one will be dominant. This issue is more potent than security, after all the card can be stolen as well but unlike the card the mobile device can point out its location before it is used making it technically safer device; and there is plethora of security mechanisms on the way, inlcuding biometrics, pins, encryption and/or combination of those. I think technology will take care of the real security threats, the consumer mindset is the bigger hurdle in mass adaption which will take some genuinely time saving use cases that make life easy, and some evangelizing.
However the landscape evolves, I, for one, am looking forward to the day when I don't have to present my loyalty card, the coupon that I printed over Internet along with my credit/debit card. The location & context should generate coupons on my device, which automatically get attached to the items I scanned with my smartphone and the loyalty information, and then the simple touch to pay.
Expect an M for Mobile logo along with Visa, Master cards, American express etc. The Discover and Iris are a good thing but the carriers are in business of networks and it is highly likely that they will have their own little wave through device, instead of a swipe magnetic stripe reader at point of sale. To lure the merchants they can give the small cellular box that latches on to the carrier's wireless network and has NFC built in for free. The details of rest of the payment processing are beyond the scope of this blog, but the carriers are capable of making money holding accounts for their network users(carrier billing is already a norm for some services), the issuance of "eCredit" can still go through normal banks. Although contact less payment POS that handle stripe are around, but if the carriers really want the piece of the pie, they will need to have control over transactions. This has obvious but serious consequences for the credit card(Visa, Master etc) and pin card (NYCE, Star etc) network providers. A lot depends on how fast the consumers will adapt mobile wallets and the marketing ability of carriers to sell their POS solutions. (I don't expect the payment networks taking this lightly or sitting down.)
The entry of another major player in form of cumulative power of carriers to provide mobile wallet services will result in increased competition in consumer credit market. The credit and related fees should get cheaper for consumers and merchants because to enter into the space the network service providers will have to entice merchants and consumers alike. There might be deals in near future that that will bundle the Mobile "E-Money" account and phone service account. Just like one can get a phone for free for two years service, we might see phone and mobile money account packages.
A boom in loyalty cards will come, even to the point where the deli next door and the fruit shop on the corner will have frequent visitor allowances. Right now my wallet can only hold so many cards and I really need to keep the obesity of my fat wallet checked. But with digital loyalty sky is the limit. Another reason of drive will be the carriers offering those services to the SMBs along with their Mobile POS.
Along with security there is the inherent issue facing any battery powered device; running out of power. Running out of battery - synonymous with running out of money is not very comforting to me. So I will need my phone never to run out of charge. Charging of phones will have to be available, what is the alternative, the banks will have universal charging stations, the ATMs will also come with NFC and you can charge your account and phone(naw, just account), the powermat will take off, solar batteries will become popular, the "charge sticks" will gain market and finally charge through WiFi will be available in smartphones. I can't say for sure which one will be dominant. This issue is more potent than security, after all the card can be stolen as well but unlike the card the mobile device can point out its location before it is used making it technically safer device; and there is plethora of security mechanisms on the way, inlcuding biometrics, pins, encryption and/or combination of those. I think technology will take care of the real security threats, the consumer mindset is the bigger hurdle in mass adaption which will take some genuinely time saving use cases that make life easy, and some evangelizing.
However the landscape evolves, I, for one, am looking forward to the day when I don't have to present my loyalty card, the coupon that I printed over Internet along with my credit/debit card. The location & context should generate coupons on my device, which automatically get attached to the items I scanned with my smartphone and the loyalty information, and then the simple touch to pay.
