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More Key Success Factors for the Digital Wallet

In an earlier post, I said that usability at multiple touch points was imperative to the success of the digital wallet. But there's more to it than just putting a multi touch point strategy in place.

Let's take a look at the other things wallet providers need to focus on.

First, they must decide how they will distribute their digital wallet. This will depend on many things, especially the importance of different touch points in the typical consumer life cycle in a particular market. Hence, in markets like Kenya where mobile penetration is much higher than that of banking channels, it makes sense to leverage the mobile distribution network to push the digital wallet to consumers.

In fact, this is exactly what Safaricom has done by building the M-PESA digital wallet into its SIM cards. On the other hand, it might be a good idea to sell a digital wallet through an app store in developed markets.

 User experience is another important consideration. My previous post stressed the need for seamlessness between all the touch points though which a digital wallet was accessible. It is equally important to deliver consistent experience on all touch points and enable customers to transition from one touch point to another, even during the same transaction. This is because the lines between different touch points as well as between the real and virtual worlds have begun to blur. Digital wallet providers must be ready for the day when it is routine for a purchase initiated online to be fulfilled inside a store, and vice versa.

 The digital wallet must also satisfy the security and regulatory compliance mandates applicable within its region of operation. Customers will resist adopting the digital wallet, regardless of its advantages, unless they are sure of its safety.

 Given the number of contenders, digital wallet providers need to find ways to differentiate their offerings from their rivals'. They can do so by enhancing their wallet with value added content, such as tools to help manage personal finances or apps enabling end-to-end mobile transactions.  

 Last but not least, it is vital to make the digital wallet as open as possible, so that the same wallet can be used across a variety of establishments and channels. At present, there is little cross-compatibility between wallets from competing providers, which is sure to create consumer dissatisfaction. In my view, a wallet that is closed and isolated has little chance of surviving.


Comments: (4)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 11 June, 2012, 15:31Be the first to give this comment the thumbs up 0 likes

All 'open loop' digital wallets from competing vendors can be used across a variety of establishments that accept Visa / MasterCard. That being the case, aren't they 'open' enough as it is? While 'closed loop' digital wallets surely have a greater challenge finding mainstream adoption, banking regulations in India and a few other countries currently don't permit 'open loop' digital wallets from nonbanks.

A Finextra member
A Finextra member 14 June, 2012, 06:37Be the first to give this comment the thumbs up 0 likes


Thank you for posting your comment. A digital wallet which is open should ideally allow consumers to choose from multiple payment instruements which can range from visa/mastercard/discover/amex cards to bank accounts,loyalty cards, cash and others.Limited funding support in Google wallet may restrict its utility as some consumers might want to fund it using their Discover cards

The post is global in scope and you are spot on in terms of market specific constraints faced by the wallet provider(which can be a bank or non banking entity).



Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 14 June, 2012, 08:38Be the first to give this comment the thumbs up 0 likes


When I read the line "can be used across a variety of establishments...", I was mislead into viewing openness from the merchant perspective. Here, there's really no problem even if a mobile wallet supports only one funding source since most merchants, who have tended to accept a wide variety of cards for a long time, are likely to accept this one card. No wonder, despite supporting only one card, Google Wallet can still proclaim, as it does, that the consumer can "pay with Google Wallet anywhere MasterCard PayPass is accepted", which is not a small number. 

Thank you for clarifying that you meant 'open' from the point of view of the consumer / payor. There, I agree with you that supporting only one or two funding sources - the way Google Wallet (NFC) does at present - severely limits the utility of a mobile wallet for the consumer / payor.

Having said that, a quick search for "mobile wallet" on Google Play brought up over 300 apps, many of whom are 'open'  since they claim to support a wide range of credit, debit and loyalty cards. Against that backdrop, it's interesting to observe how a 'closed' product like Google Wallet has garnered a disproportionate share of voice among mobile wallets.

A Finextra member
A Finextra member 15 June, 2012, 09:31Be the first to give this comment the thumbs up 0 likes

Google is now moving towards an open wallet system which validates our analysis.

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