The mobile phone and semiconductor industries have been talking up the concept of replacing your wallet with your phone for quite a while. But the frequency of new announcements in this area indicates we're entering an exponential phase of its growth and that m-commerce is rapidly going mainstream.
Earlier this week Visa announced its next generation of payments solutions with an emphasis on new commercial environments, such as mobile and social networking.
"By helping to reduce abandoned online shopping carts and bringing new account holders into the Visa network, we create a win-win-win for merchants, consumers and financial institutions," noted Joseph W. Saunders, chairman and CEO of Visa. "In addition, we believe Visa's new payments products and services will help expand financial inclusion to the billions of mobile subscribers today who currently lack access to traditional financial services."
This stuff will launch in the US and Canada this autumn, and it will include:
- Click-to-buy: Shop by entering an email address, alias or online ID and password, instead of a billing address, account number and expiration date. In addition, Visa is exploring dynamic authentication technologies that will bring added layers of security to online purchases.
- Cross-channel payments solution: The wallet consolidates multiple Visa and non-Visa payments accounts and can be used in mobile, eCommerce, social network and retail point-of-sale environments.
- Preference management: A menu that enables consumers to set preferences for how their wallet will work, allowing them to customize and control the features of their personal wallet from privacy settings to designating which account will be accessed based on merchant type or purchase amount.
- Merchant offers: A service that allows consumers to personalize their shopping experience by opting-in to receive money-saving discounts or promotions from participating merchants.
Over on this side of the pond, market researcher TNS reported that use of mobile wallet technology in the UK has doubled in the past year, with almost 12 percent of consumers now using their phones to make payments. Furthermore 20 percent of people now use their phone for basic banking, such as checking their balance.
TNS says mobile wallet technology doesn't necessarily require a bank account, and payments can be added to a mobile phone bill or a simple top-up account, but the longer term future points to our phones having all the functionality of our debit and credit cards, and more.
Stephen Yap, Group Director at TNS Technology, said, "The huge increase in the use of mobile wallet technology in the UK shows the dramatic effect technology is having on our lifestyles. The incredible success of the smartphone is encouraging people to migrate many of their key online activities onto their mobile.
"As we become more familiar with smartphones and as mobile networks improve, we should see this number increase further, until mobile is the primary platform for most everyday online functions, including making payments. Soon we could be seeing phones as our primary portals for all online needs, particularly as the growth of the cloud will place less emphasis on storage space and more on mobile access points."
Fellow researcher GfK recently surveyed a bunch of people about mobile payments, and found that trust and familiarity are the key drivers in getting consumers to indulge in m-commerce. The ideal combination, it seems, is a trusted mobile brand allied to a trusted financial services brand.
In this international survey, Nokia, Apple and PayPal emerged as the most trusted brands, with the latter already associated with mobile payments. Nokia was the most trusted mobile brand in China, while Apple was especially highly regarded by those who already have an iPhone.
GfK acknowledged that mobile payments have been a long time coming, and pinned a lot of the blame for that on delays in the device and ecosystem support for NFC. For the mobile wallet to be a really compelling, instant payments via an oyster-like touch-points need to become a reality, and they rely on phones having NFC chips.
"Creating a mobile payment service that consumers are comfortable adopting means leveraging the trust placed in financial brands, but it is also vital to have a presence in the mobile sector," said Ryan Garner, director at GfK Technology. "By tapping into all of these strengths, a mobile payments solution would quickly gain momentum with consumers and put an end to the delays experienced by NFC-based services in recent years."
Semiconductor specialists such as NXP have been bigging-up NFC for years, but the last MWC was a big one for the technology after Google introduced NFC support to the latest version of Android. NFC is fast becoming as standard in smartphones as Wi-Fi or GPS, and with this critical mass achieved, it surely won't be long before retailers follow.
Once people start trusting their phones in the same way they do chip-and-pin cards, there will be little remaining reason, bar nostalgia, to retain your wallet. But there's bound to be considerable resistance from consumers to putting so many of their eggs in one shiny basket.