Mobile wallets don't have enough going for them right now

May 12, 2016 | by Richard Buckle
Mobile wallets don't have enough going for them right now

A recent report on "60 Minutes" discussed how vulnerable smartphones have become and the gaping holes present in the background SS7 networks.

In an interview, security specialist John Hering, cofounder of Lookout, said, "In today's world there's really only two types of companies or two types of people … those who have been hacked and realize it and those who have been hacked and [don't realize it]."

Every bit as important was the scene-setting opening to the 60 Minutes story:

A lot of modern life is interconnected through the Internet of things — a global empire of billions of devices and machines. Automobile navigation systems. Smart TVs. Thermostats. Telephone networks. Home security systems. Online banking. Almost everything you can imagine is linked to the World Wide Web. And the emperor of it all is the smartphone.

But if the emperor of all our interactions with the world is the smartphone, can the majority of us be categorized as dumb end users?

If smartphones can be hacked as readily as the 60 minutes program demonstrated, and if all of us, knowingly or not, have been hacked, does it make us less dumb to put all of our card information into a phone to be stored somewhere in a server farm? 

I have been posting a lot recently about mobile devices, including phones and the mobile wallets that are gradually gaining in popularity. Between the lines has been a degree of nervousness about just how vulnerable we have all become — and also the question whether mobile wallets in particular are a step forward or a giant leap backwards that brings us all to the edge of some terrifying precipice.

Then I read a post at Banking Tech about a Norwegian mobile payment site that was closing down. According to the post, "The Norwegian Valyou mobile payment service started by DnB and Telenor will be closed at the end of this month as a result of slower than expected activation of NFC enabled POS terminals and a much lower than expected end user uptake."

Could the smart end users of smartphones in Norway be onto something? Is the year of the mobile wallet still far beyond the horizon?

Have the citizens of Norway perhaps learned something that the rest of us have missed? Or have I missed the point and the market for mobile wallets doesn't include the likes of me?

In a comment on my post to the LinkedIn blog Pulse, comForte CTO Thomas Burg wrote that firstly, "The key target group for mobile wallets is young. Very young. They are 21, maybe even 15, years old. And then secondly, to set up a mobile wallet, you need a credit or debit card. Once you have a card, you really don't need a mobile wallet any longer."

Following this logic, if you generate cash you can get a card and once you have a card you can create a mobile wallet. What's wrong with the cash seems to be the logical question to ask!

When it comes to the U.S. marketplace, the waters get even murkier.

According to Steve Gilde, global alliance manager at IR, there's more to the slow uptake of mobile wallets than the availability of smartphones.

Indeed, Gilde argues that perhaps it's the diversity of offerings that may be contributing to the slow progress to date — too many mobile carriers with different programs, too many choices at the phone and yes, too many considerations at the point of sale.

When it comes to mobile wallets, having options doesn't appear to be solving anything. Throw into this mix concerns about security and "some of the (ridiculous) claims that you can get rid of your physical wallet," Gilde said.

"What are we meant to do about our driver's license, insurance cards, etc.? The existing plastic card based system still works well and the behavior of pulling out a card is deeply ingrained across all segments of our society."

Equally important, Gilde said, is the fact that with mobile wallets there is "No complete 'ecosystem,' as important items like loyalty points, reward programs, still get handled separately."

As much as we all like to discuss disruptive technologies and industry transformations, the only thing that ever develops traction is the thing that clearly offers an improvement over what we already have — whether it's a battery powered car, a faster or cheaper way to find hotel rooms, or even grocery items delivered to my door via an app.

Mobile wallets just don't have enough going for them right now, and while it may be true that in a global world of billions of devices and machines, the emperor of it all is the smartphone, as smart as the phone may be, it still has a long way to go to overthrow the king. Yes, cash is still king!


Topics: Card Brands, Carriers / Operators, Direct Carrier Billing, Mobile/Digital Wallet, POS, Trends / Statistics



Richard Buckle
Richard Buckle is the founder and CEO of Pyalla Technologies LLC. He has enjoyed a long association with the IT industry as a user, vendor, and more recently, as an industry commentator. wwwView Richard Buckle's profile on LinkedIn

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