When is a mobile wallet a 'Mobile Wallet'
The term wallet is banded around a lot along with my own personal hate the term ‘mobile wallet’. Why do I hate the term mobile wallet so much, well it is misused most of the time. So what we mean by the term mobile wallet; is it just to hold a currency and enable you to pay for things using a mobile device, if so, do payment apps qualify? Or does it need to store multiple payment methods, loyalty cards, coupons, vouchers and ID to qualify? Is there a set definition of a mobile wallet, or is it constantly evolving over time?
There are a lot of views, just as there are a lot of views as to what a mobile payment is. At a recent Mobey Forum meeting of 60 members they failed to come up with a definition. The Carlisle & Gallagher Consulting Group has had a go stating: “A mobile wallet is an ‘app’ for your smart phone or tablet that allows you to organise your payment cards, coupons, vouchers and identification to facilitate financial transactions.” However I know many people who would disagree with this stating that MPESA is a mobile wallet, yet this works on USSD with no App so this definition cannot be correct either.
Why does it matter so much, well a lot of Telcos have since MPESA (60% of Kenyans – 71% rural, 51% urgan: use their mobiles for banking and FS transactions – KBA) launched been rushing to get into market with ‘mobile wallets’, not many though have been really successful and even those that have many have now launched companion open loop prepaid cards. The GSMA are reporting that there are now 219 services in 84 countries as at the end 2013, compared to 179 services in 75 countries end of 2012. There have thus been a lot of companies launching mobile wallet solutions, dedicated platforms designed to offer the best ‘mobile wallet’ solution to meet this explosive growth. These are closed loop/walled garden solution, normally promoting P2P payments and P2B payments and nearly always using ‘Agents’ for the cash in and out process.
So maybe we should step back a second to consider what we mean by a mobile wallet. The reason I believe this term is so misused is there are few true mobile wallets. Consumers today demand omni channel access. That is I may have a wallet that either stores funds directly, or could even just front my other payment cards. I will access this wallet through my Samsung watch, my phone, my tablet, and my PC. Paypal was never called a PC Wallet, the PC was just an access channel for the user to reach the wallet. Two years ago a major telco in the Middle East did some research on their new wallet. The customer feedback was very positive, they only had one real complaint – ‘Why could they not access the wallet through their PC’. In the US online sales have been forecast to grow at some 15% in 2014, and merchants now get 20% of all their sales from mobile devices but 53% of mobile transactions are made on tablets (Android and IPad) (Adyen Global Mobile Payments Index), thus whilst yes it is a mobile device it is not on a mobile!
Mobile though could be considered to be just the latest along with watches and who knows where the future will take us with wearable devices. Thus if we accept that most solutions are wallets with multiple access channels for the consumer to interact then we must also start considering that the open loop card where the balance is held on the wallet and auth and settlement is also done from the wallet is also just an access channel. This is what we have seen company’s’ form MPESA in Kenya to Neteller with Nett+ and Skrill roll out, the latter having over 30m customers globally.
Mobile is therefore ‘mobile enablement’ much as a companion open loop card is ‘card enablement’. To this end therefore describing most wallets as ‘Mobile Wallets’ is wrong, they are merely mobile enabled wallets along with normally PC enabled etc. Certainly there are exceptions, Tigo Money in Tazania that can only be access through the mobile and their 6,000 agents is a mobile wallet, but these are the exceptions, not the norm.
The ‘wallet’ space is evolving fast, and with HCE recently announced it will continue this rapid progression. But there is a need to understand better how consumers want to interact with solutions and not pigeon hole solutions with terms that really are not correct or logical.