This article originally appeared in the Jan. 2011 issue of INTERNET TELEPHONY
We’ve been hearing a lot of mobile wallet lately, but just what it is, who’s involved, and what does it mean for our pocketbooks and businesses?
INTERNET TELEPHONY recently interviewed Rich Nespola, chairman and CEO of TMNG Global, which provides consulting and advisory services to companies in the mobile wallet ecosystem, about what’s happening on the mobile wallet front.
Define mobile wallet.
Nespola: Mobile wallet is all about convenience. It combines the security and payment capabilities of a credit card with the usability of a mobile phone, abetted by the value-add possibilities inherent in devices with built-in processors, high-quality graphic displays, ubiquitous Internet connectivity and touchscreens.
What are the key mobile wallet initiatives out there today?
Nespola: In the U.S., the two key initiatives of course are Isis and Google (News - Alert) Wallet. Google Wallet has the questionable advantage of being the first mover, with near-field communications readers at 150,000 U.S. retailers, and partnerships with Citigroup and Sprint. But Isis has lined up the other three major U.S. wireless carriers (Verizon, AT&T (News - Alert) and T-Mobile), and has partnered with all the major credit card companies in the U.S. Isis is expected to launch this year.
And don’t discount PayPal (News - Alert), which is working on its own initiative, and can draw from a large established consumer base and deep experience in online payments.
How are they different? The same?
Nespola: Isis and Google Wallet are very similar in that they both are secure app-based solutions that rely on near-field communications-enabled phones that are compatible with NFC readers at points of sale at brick-and-mortar retailers. The key difference is that Isis’s revenue model is based on taking a percentage of transactions, while Google Wallet’s is based on aggregating customer data and serving mobile advertising to users. Both Isis and Google Wallet seek to be the dominant standard.
Why is mobile wallet so interesting to so many kinds of companies, from Google to Verizon to MasterCard and VISA, to potentially Apple (News - Alert)?
Nespola: East Asia has often been at the vanguard of the adoption of mobile phone technologies, and mobile money is no different. The widespread availability of mobile wallet functionality in Japan demonstrates the huge revenue potential for mobile money in the U.S., by far the world’s largest credit card market. Even a tiny slice of global or U.S. credit or debit card transactions presents a significant revenue opportunity. With no established dominant player in the U.S., telecoms, IT companies, credit card makers and handset makers all see a market up for grabs.
What do you see as the role and prospects of the wireless service provider in mobile wallet?
Nespola: With their ownership of the distribution channel and the service customer relationship, wireless carriers can be a key wedge in establishing which mobile wallet standard becomes widely adopted – and which doesn’t. In addition, there are opportunities for wireless carriers to capture revenue all along the mobile payments value chain.
What do you see as the role and prospects of Google in mobile wallet?
Nespola: Google is uniquely positioned to appeal to retailers because of its no-fee model. But as Google has often found, offering a great product and getting widespread adoption are not the same thing. It remains to be seen how much credit card companies and banks will embrace Google Wallet.
What do you see as the role and prospects of online retailers in mobile wallet?
Nespola: Amazon has already started encouraging customers to use its price-check app to compare brick-and-mortar book prices with its online prices, which are inevitably lower. I wouldn’t be surprised to see apps like this develop into more robust instant purchase systems.
What do you see as the role and prospects of advertising firms in mobile wallet?
Nespola: The holy grail of mobile advertising is location-based advertising. But consumer concerns over Big Brother-like knowledge of their whereabouts have inhibited its development. This will be doubly the case with credit cards, which consumers are especially sensitive about. Mobile advertising linked to the data gathered from mobile payments will eventually come, but it will take some time, and there will be some stumbles.
What is the status of mobile wallet availability today in the U.S.?
Nespola: True mobile wallet functionality is currently only available to owners of Google Wallet-enabled Samsung (News - Alert) Nexus S, although readers are available at more than 150,000 retailers. The story will likely be a lot different by the end of 2012.
Edited by Stefania Viscusi