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Tap. Pay. Go.

Google Wallet is flying high. Literally. Earlier this month, it announced that it was moving to the cloud so that it would be able to accept a variety of credit and debit cards.

What is it about this and similar technologies, that has everyone so excited? Is it the opportunity? As part of its research, when SapientNitro asked when mobile payments (which has three components, namely m-commerce, m-payments and m-wallets) would turn mainstream, the most popular answer from every part of the globe, without exception, was either within 1 to 2 years or within 3 to 4 years.

But other products have had equally bright fortunes told, and failed. In my view, the reason why mobile payments especially tap (or wave) and go mobile wallets from the likes of Google, Visa and Amazon have such a promising future is because with them, everyone wins.

Consumers win because they can access digital cash easily anytime, anywhere they need it, at much lower risk of theft of cash, cards, or worst of all, identity. They can save money and time that would be lost in queuing up at the ATM or the bank's cash counter. They can keep track of expenses, and do so much more thanks to a wide variety of mobile apps. Finally, the proliferation of cheaper, yet more powerful smartphones running on the Android platform has made the mobile wallet device itself affordable for consumers.

Developers, financial intermediaries and merchants win because they can keep innovating upon the mobile wallet, which is built on open source software, and build an unlimited number of applications to go with it.

Device manufacturers win because they can exploit new demand for NFC-embedded smartphones. Similarly, mobile network operators not only benefit from higher traffic and transaction fees, but also see a new opportunity to build mobile commerce networks.

And regulators win too because mobile wallets bring transparency to financial transactions, making it much harder for money launderers, terror financiers and other unscrupulous elements to ply their trade.

If there's one barrier to success, it's the cost of setting up the infrastructure for NFC payments. Countries like Japan and U.K. have crossed that hurdle and are on their way. It's for the rest of the world to follow.

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Comments: (3)

A Finextra member
A Finextra member 27 September, 2012, 11:24Be the first to give this comment the thumbs up 0 likes

True on many facts, but I guess merchants need a proof of usage numbers before they make changes on their backbone merchant systems. For example average supermarket chain has 20 supermarkets in region with 40 cash registers. If new software costs about 100 €/ per register, just figure it out if merchant will make investment for m-payments if usage numbers are not attactive on day one.

A Finextra member
A Finextra member 27 September, 2012, 14:50Be the first to give this comment the thumbs up 0 likes

"They can save money and time that would be lost in queuing up at the ATM or the bank's cash counter."

We can have the same benefits with plastic cards now...

"If there's one barrier to success, it's the cost of setting up the infrastructure for NFC payments."

With the correct approach (protocol + architecture), secure POS terminals are not needed - that way we can deploy US$10 devices (including mobile- and tablet-based ones...)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 29 September, 2012, 12:17Be the first to give this comment the thumbs up 0 likes

Contactless cards, which use the same underlying RFID technology as NFC, have been around for close to a decade. If merchants haven't found a compelling reason to invest in contactless readers during this period, I'm not sure they'll find one now with NFC-based mobile wallets. 

IMO, the biggest barrier is lack of compelling reason for payers to adopt mobile wallets. All consumer-side benefits of mobile wallets are equally available with the plastic contact and contactless form factor of cards. As for usage, consumers have to take out their smartphones, hope there's enough battery, enter PIN or trace pattern on lockscreen to reach the home screen, locate the mobile wallet app, fire the app, enter mobile wallet PIN, hope that data plan works, select the appropriate card - before they can Tap, Pay and Go. With a plastic card, it's simply open wallet, take out appropriate card, Swipe / Tap, Pay and Go. Therefore, it's highly questionable whether mobile wallets deliver better CX compared to plastic cards.