Mobile Wallets: Here for Good?
Physical forms of payment, like cash and credit cards, are becoming a dwindling resource, and technology is expediting the process. Mobile wallets are becoming the future of paying for goods and services. With tech giants like Apple joining the race to provide mobile payment solutions, the reality of mobile wallets is more apparent (and trendy) than ever. Will this new digital payments market be as diverse as the leather wallet industry?
The average consumer has already demonstrated an appreciation for the mobile wallet concept. Hotels allow you to access rooms with phones, houses can be unlocked with a phone, digital coupons can be downloaded, airport tickets scanned, punch cards replaced. All things that once required a physical form are becoming commonplace in the digital world. Many things that you once needed to keep in your wallet or purse are now neatly organized on your phone for you. It makes sense that credit cards are the next step.
Of course, mobile payment isn’t technically new technology. Ever since Apple Pay was released last month, however, the adoption and use rates of mobile wallets has increased exponentially, even for Apple’s competitors. Apple had over one million credit cards added to Apple Pay within the first 72 hours of its release. Google Wallet, which has been around since 2011, has seen weekly transactions increase 50% and new users double in the past couple of months.
Consumers love their mobile wallets. All one needs to do is look at the Facebook page of Rite Aid or CVS to see just how much. Because of exclusivity agreements, the MCX merchants decided to shut off their NFC terminals, effectively blocking the use of Apple Pay and Google Wallet, until their own mobile wallet, CurrentC, goes live sometime next year. As a result, customers of Rite Aid and CVS took to Facebook to show their anger, and many threatened to take their business to Walgreens where they can use the mobile wallet of their choosing. Industry columnist Walt Mossberg recently penned an article asking, “What are the anti-Apple Pay Merchants Afraid Of,” in which he discusses the value of competition around mobile wallets and the importance of letting customers choose what solution they use.
The question is then, are mobile wallets here for the long haul this time? The experts on the Apple Pay panel at Money20/20 this past week seem to think the answer is yes. One panelist, Jim Smith, head of digital and direct channels at Wells Fargo said of Apple Pay, “This brings all the players together and creates a standard we can build on.” The bank had been working for years to develop a mobile payment solution that was both secure and easy to use for its customers, so Smith was amazed when Apple was able to get thousands of banks and retailers on board with its solution in just one year. This ability to bring such a bold idea to market quickly is a trademark of Apple, but once again the benefits reach more than just Apple and its consumers. The panelists’ point, essentially, is that the launch of Apple Pay has put mobile payments on the map in a real way—consumers want to use it and merchants want to accept it.
People will still have a tendency to fear and resist change. Whether they accept it or not, mobile wallets are here, and you may soon find yourself explaining what a wallet is to your kids.