The convergence of the major card brands within various evolving Near Field Communication-based mobile payment schemes could inspire more merchants to prepare for contactless-payment acceptance. But the path to individual banks’ participation remains hazy, observers say.
Google Inc. on Sept. 19 said as part of its official launch of Google Wallet it would license the payment technology of all the major card brands to include them eventually in its mobile-payment scheme (
Google provided no timeframe for when Visa Inc., American Express Co. and Discover Financial Services will be part of the scheme. For now, it only includes MasterCard Worldwide and Citigroup Inc., along with telecommunication partner Sprint Nextel Corp. and First Data Corp., which is acting as the trusted service manager to provide the payment security credentials within smartphones.
The major card brands’ participation in Google Wallet, and also in Isis, a rival scheme announced late last year (
“But this is really just land-grab time for the card brands,” he says. “We are still a long way from seeing these fields full of merchants, consumers and banks using mobile wallets every day.”
Now that the first mobile wallet is live, however, merchants may begin to learn “whether there is any incremental value” to mobile payments and whether the concept is worth supporting, Tomasofsky suggests.
Sprint on Sept. 19 said Google Wallet is available to all users of its $49.99 Nexus S 4G smartphone who may opt to download the Android app for Google Wallet. Those who have a Citi MasterCard credit card equipped with PayPass contactless technology or a Google prepaid card may use their phones to initiate payments at NFC-enabled point-of-sale locations of about a dozen participating merchants. Merchants involved so far include Macy’s Inc., Walgreen Co. and Foot Locker Inc.
For banks, decisions about getting involved in mobile-wallet technology may be more complex, Tomasofsky suggests.
“Banks are going to hesitate to invest in multiple approaches to mobile wallets because that will be costly, and they may also worry about how their brands will be represented within a broad wallet concept. Will their brand be first or last in the lineup? How much will it cost, and who will they pay?” he asks.
It could take as long as 10 years for mobile-wallet platforms to achieve broad standardization that would enable banks to adopt it easily, just as they offer payment cards today, Warren Gardiner, chief product and strategy officer at Clear2Pay, a Belgium-based payment-technology vendor, tells PaymentsSource.
“Just as it was with cards, mobile-wallet schemes will begin with multiple standards, and the world will gradually agree on standards when a couple of major players consolidate. But that could take a decade,” Gardiner contends.
Dom Morea, First Data senior vice president of mobile commerce solutions, says it may take “a while” for mobile-wallet schemes to reach broad standardization, but he notes the path to adopting new technologies is rapidly accelerating.
“It only took four years for the iPhone to become ubiquitous and in just a few years we’ve moved to a mobile culture,” Morea says. “We expect to see a large percentage of early adopters moving to mobile payment, which will eventually inspire merchants and banks to get on board.”
The commitment of the major card brands to the most prominent mobile-wallet schemes to emerge so far is “definitely helpful in furthering a sense of inevitability, which is what you need for merchant signups,” Aaron McPherson, practice director at IDC Financial Insights, tells PaymentsSource.
But McPherson does not expect to see broad adoption for at least a couple of years.
“Competition will be on the basis of (merchant) offers, not access to card brands,” he says.
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