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The War of the Wallets

Following a tentative start with Google first launching its mobile wallet offering last year and then O2 in recent months, the war of the mobile wallets has finally begun in earnest. Last week Microsoft announced the development of its new wallet for Windows Phone, which will allow customers to not only pay through NFC technology, but also store their coupons, credit cards, and loyalty cards all in one handy place. The news comes hot off the heels of Apple, who has recently sparked industry speculation that the iPhone 5 will have some wallet capabilities in the form of the recently announced iOS6 Passbook app.

Significantly each of these offerings have slightly different capabilities, with both Microsoft and Apple choosing to integrate additional customer rewards into their technology, rather than pure payments. This raises the question of exactly what customers want from their wallet – is it a payments capability or a much more diverse solution that is enough to rival the modern consumer’s real-life purse?

O2 has provided a great example of how the payments wallet can be used to meet genuine customer need, showcasing the potential of the O2 Wallet app in the tiny village of Rhiwbina in South Wales. Surprisingly in this day and age but not uncommon, the 11,000 residents of Rhiwbina don’t have access to a single cash machine. This makes it crucial for inhabitants to be organised with their money in order to avoid running out of cash. In this instance the mobile wallet has proven to be incredibly useful, solving day-to-day problems such as paying a neighbour back for some shopping or dividing a round of drinks between a large group of friends.

Of course, most towns and even villages in the UK have far more convenient access to cash than Rhiwbina, forcing banks and mobile operators to consider how mobile payments can meet the needs of these very diverse customer groups. The fact is that in order to make mobile wallets truly worthwhile, British consumers will have to see a far greater incentive than just a convenient way to pay, especially as mobile banking apps and faster payments make money transfers easier than ever before. O2 has already built mobile shopping and related discounts into the O2 Wallet, with Apple displaying an innovative approach to convenience by allowing users to store airline boarding passes and cinema tickets in its Passbook app. It is clear that the mobile payments battleground is heating up, but as each market player introduces its own innovative offering, the winners will be those who combine pioneering ways to pay that meet genuine customer needs with value-added services that change the way in which consumers manage their money.



Comments: (2)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 28 June, 2012, 11:48Be the first to give this comment the thumbs up 0 likes

Maybe it's only me, but I find it difficult to understand typical mobile P2P payment use cases such as "pay a friend back for lunch" and "dividing a round of drinks between friends". If everyone in a group has an m-wallet, isn't it more natural for each of them to pay their respective tab directly to the restauranteur or bar owner? Why should the current practice of one person paying the whole bill by plastic and claiming back individual shares from the others even arise?

A Finextra member
A Finextra member 28 June, 2012, 15:25Be the first to give this comment the thumbs up 0 likes

I am not sure MSFT allows consumers to decide which cards are to be stored in m-wallet: since m-wallet is linked to an embedded "secure element", it's up to MSFT to make that decisions. "Wallet" should let its owner (i.e. the consumer) to decide how to use it. Otherwise, it's not a wallet as such, but a payment app - the term "m-wallet" is used too loosely by many companies.

If I, as a consumer, still have to carry around a physical wallet (e.g. for ATM withdrawals), the value of m-wallet is diminished.

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