As both a user of a digital wallet and an analyst in the financial services industry, I've been watching with interest the lack of success that credit card issuers are having with their digital wallet offerings.

Wells Fargo & Co., which is discontinuing its EasyOrder digital wallet as of today, attributed its failure to low customer use. The company reported that just a fraction of 1% of its customers had used the wallet.

Comparing this with the 10 million registered users that Gator.com reports for its products, I wonder how the companies' offerings differ and what the financial services industry can take away from all this. The following are a few observations.

Operating system improvements have reduced much of the pain associated with form filling. Even without a wallet that explicitly retains billing, shipping, contact, and payment information, operating systems have gotten smarter.

For example, Microsoft's AutoComplete feature uses your previously recorded data to predict your future input. When this feature is used for online merchant forms, it performs most of the functions of a wallet, without the need for any user intervention or setup.

Card issuers have poorly marketed their wallets. I took a tour of issuer Web sites to see how they marketed their wallets. Some sites had the wallet so deeply camouflaged that I never found it, though I knew these companies offered one.

As a First USA cardholder, I took a tour of that site. I finally found the wallet embedded in the online shopping promotional section, buried with offers from a range of online merchants.

And even if people could find the wallet on their card issuers' Web sites, few could discover what benefits the product would supply.

As we all know, particularly in light of the recent focus on privacy issues, people are wary of giving personal information at a Web site. If banks want to promote their wallets, they must do a better job of communicating the benefits.

Why did it seem like a good idea? A number of appealing factors persuaded card issuers to rush to offer wallets to their cardholders.

First, they are a relatively simple technological product, with straightforward implementations that do not require integration with legacy systems. This made it easy for financial institutions to roll out a product to their customers.

Second, there was the drive to increase the stickiness of Internet banking sites. Wallets were seen as a way to further infiltrate the shopping experience and draw customers closer into the fold.

Finally, a group mentality dictates offering whatever the competition offers. But even if you are in a rush to offer functionality to users, it still makes sense to develop a good business case for any new product and to ensure that it is a good fit for your company.

Should digital wallets be rolled into a bundled financial services application? What may make sense for digital wallet deployments is to roll them into other value-added services. Shift the focus from reducing pain to increasing benefit.

For instance, digital wallets incorporated with a single-use card may address the needs of security-conscious cardholders. NextCard has incorporated a wallet into its Concierge service, which fills out forms, remembers passwords, and offers a lowest-price guarantee designed to appeal to price-conscious Internet shoppers.

Down the road, wireless shopping, if it gains acceptance, would be a natural fit for digital wallets. Form filling is somewhat tedious on a PC, but it is excruciating on a mobile telephone, so as mobile commerce grows, people may find added value in digital wallets.

Is there any compelling reason for card issuers to invest in wallet technology? Probably not, unless the wallet is linked to other applications. Though the investment required to use wallets is low, there is little potential upside.

No evidence exists that digital wallets increase cardholder loyalty or transaction volume, particularly in light of the very low use rates reported for wallets so far. And server-side wallets have persistent maintenance and security requirements that must be cost-justified.

Though wallets gave card issuers a quick hit in terms of delivering services, the product's value remains unclear to most consumers and card issuers.

So why do I love my wallet? As a desk jockey, I spend an enormous amount of time in front of a PC. I am very aware of financial services, and I am comfortable with technology. For me, the wallet removes most of the tedium of filling out forms, at the small expense of downloading an application and entering my data once.

The mildly irritating pop-up ads, which I invariably close, are a persistent inconvenience, but this is a fair tradeoff as far as I'm concerned. When my PC was recently replaced, one of the first things I did was reinstall my wallet. I've been sold on the value of wallets, but my experience is probably not representative of that of most Americans.

So in their rush to keep up with the Joneses and offer digital wallets to their customers, did banks neglect to figure out how to market them? Or maybe it was a case of getting lost in the shuffle - maybe the lowly digital wallet could not compete with bill paying and online lending, which promised more value for consumers and real revenue opportunities for financial institutions.

The next time you have to fill out yet another tedious form online, you be the judge.

Ms. Capachin is a senior analyst at Meridien Research, a technology consulting firm in Newton, Mass.

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