Tuesday, 2 September 2014

Can Apple make the mobile wallet work?

So far the mobile wallet has been the dog that failed to bark in the payments world. There is little progress despite the fact that the key technology, NFC, has been around for a while, and despite the success of Paypal, an online money transfer and payment platform, for many years now.
Google perseveres, with little appreciable cut-through – the Google Wallet is not even available in the UK. Square, which made a success of its POS dongle for iPhones and iPads, had a more costly failure when it pulled its Square Wallet app from the Google and Apple app stores in May. Paypal itself is now trying to position itself as a mobile wallet to be used in shops and restaurants.

The basic problem seems to be that it’s hard for a new payment method to improve on the current one centred on a multiplicity of plastic cards plus assorted loyalty schemes which are on offer to consumers at present. It isn’t high up the list of a consumer to improve on this particular aspect of their daily life, and the way Square tried to do this ended up being slightly strange, involving giving the shop assistant your name. The Google Wallet hasn’t really improved on the existing way of buying things at the till but has tried to combine some money transfer aspects.

However, there still seems to be an underlying assumption that the industry will move in that direction, and it’s just a case of hitting on the right combination of ease of use, security and added incentives for the consumer, with ubiquity of enabled POS machines hopefully following.

And it looks like Apple is going to be the latest to give NFC and e-wallets a push, with mobile payments the focus of the hype for the new iPhone ahead of its launch next week.

We don’t yet know what the mobile payments offering will look like. This will become clear next week when the iPhone 6 is launched, but reports suggest that Apple has partnered with American Express, Visa and Mastercard for its iWallet offering. It will be the first iPhone model with NFC and will also be able to make use of the fingerprint recognition technology which was already there in the iPhone 5s.

How and whether users will be incentivised, what role vouchers and coupons will play, and who gets access to data about consumers’ spending patterns and location histories etc, all remains to be seen. Whether banks will get a chance to build apps to make full use of it will also be of interest.

But there is perhaps a parallel to be drawn with the tablet computer, which existed at least as far back as the 1980s but only achieved lift-off with the first generation iPad in 2010.

So, can a sprinkle of Cupertino cool do for the mobile wallet what it previously did for the tablet computer?

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