“How would you like to pay for that, sir? Cash, credit or phone?”

Wired's Christina Bonnington spent one month using a digital wallet instead of a physical one.

There are so many digital wallets out there today that if they were actual physical items, you would be hard-pressed to find a purse, pocketbook, handbag or jacket pocket big enough to safely store them. And last month, yet another one appeared, with the launch of the long-awaited Isis mobile wallet. This joint venture of AT&T, Verizon and T-Mobile allows consumers to pay on the go with their phones, using NFC (near field communication) technology. While it’s currently still only available in Austin, Texas and Salt Lake City, Utah, there are already hundreds of stores in these cities ready to accept payment using this new technology.

But as GigaOm’s Ryan Kim notes, what with Isis, Google Wallet, Square Wallet, Passbook, PayPal and mobile apps for purchases at specific US stores such as Starbucks and Dunkin Donuts:

“the increasingly crowded field highlights just how fragmented the mobile payment market has become. And that threatens to confuse consumers and merchants and may slow the adoption of mobile wallets in general.”

However, there are some crusading early adopters. In a fantastic article for Wired magazine, Christina Bonnington describes the experience of ditching her physical wallet for a month and just using digital ones. Given that she lives in San Francisco’s Bay Area, which is probably one of the best-connected areas in the world, Bonnington found:

“replacing credit cards and cash with mobile apps and services is surprisingly easy, though not without planning.”

Well, it might have been easy for Bonnington, but the regular consumer will, I think, beg to differ.

For one thing, Bonnington needed both an iPhone and a Samsung Galaxy Nexus to load up on all the different apps and mobile wallets she needed to get her through the month. If ditching your physical wallet means carrying a second phone on you at all times, then it’s hard to see where the advantage lies in terms of convenience.

And the bewildering array of apps and services Bonnington signed up to  Instacart for grocery shopping, LevelUp and Square Wallet for restaurants, GrubHub, Delivery.com, Eat24, GoPago, and OrderAhead for takeaways, Google Wallet for large retailers and gas stations  is enough to have anybody reaching for their credit card.

For mobile payments at the point of sale to really take off, several success factors have to be met: consumers need to be offered real value in using their mobile wallets (like saving time or saving money) if they are to give up the convenience of the credit card; merchants need to accept such payments, which in many cases requires updating their point-of-sale software and terminals; and the right business model has to be found for all stakeholders to benefit from mobile payments – from merchants, banks, cards and service providers to technology providers.

And while mobile wallets in emerging markets are proving more popular because they solve a real need for the unbanked population, Gartner research director Sandy Shen  explained to Fierce Wireless’ Mike Dano that the ecosystem in most markets outside of Japan is still under-developed:

“Not many ventures have demonstrated good success so far”

It will probably take a few years for mobile payments at the point of sale to become mainstream in developed markets. But until it does, that’s good news for service providers who can continue to capitalize on the popularity of direct carrier billing for app stores and digital goods, where consumers are exceedingly willing to make mobile payments  without having to disclose their credit-card details  via their phone bill.



  1. Eric Danis
    Posted November 20, 2012 at 4:14 am | Permalink

    The future will eventually be bright: http://mashable.com/2012/11/15/mobile-payments-top-1-trillion/

    In the meantime, service providers can pursue other uses for the technology, such as digital keys and tickets, etc.

  2. Jonnah Kurian
    Posted November 20, 2012 at 4:32 am | Permalink

    It seems very helpful in all kinds of handling money. :D

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