6 Major Course Corrections of Mobile Wallets

Deep Integration: Google Wallet

Google used to require a deep integration from any bank that wanted its card in the Google Wallet mobile payment app. At the product's launch, Google had Citibank, but no other banks signed on before Google changed its approach and allowed banks to participate without any meaningful integration.

Lesson Learned: In mobile payments, friction is as big an issue for banks as it is for consumers. (Image: Bloomberg News)

Password Problems: Starbucks, Google

The Starbucks mobile payment app may be a hit among coffee drinkers, but it was in hot water recently for storing passwords in plain text. Google faced a similar backlash in the early version of Google Wallet, which made it possible for people to bypass the app's PIN protection by resetting the PIN. Both companies quickly repaired their security.

Lesson Learned: Big companies are big targets. Developers must make sure their payment apps are airtight. (Image: Bloomberg News)

'No Interchange' Pricing: Square, LevelUp

Square and LevelUp both tried to offer pricing plans that eliminated interchange fees, and both companies scrapped them after merchants complained. Square said merchants found the terms of its flat monthly fee plan too restrictive, and LevelUp said merchants wanted more flexibility than they got from its plan of charging for traffic from its loyalty program.

Lesson Learned: Merchants may hate paying transaction fees, but they also hate unconventional pricing plans. (Image: Bloomberg News)

Signal Strength: LevelUp, Shopkick, Groupon

A mobile wallet is only as good as its signal. LevelUp used to distribute 3G smartphones to merchants to use to scan QR codes from its consumer wallet app, but found the phones sometimes struggled to find a signal. It later replaced these with standalone scanners. Shopkick and Groupon each introduced "offline" capabilities so that their apps could function even when they could not get a signal.

Lesson Learned: A mobile payment system must work well even when the user's phone does not. (Image: ShutterStock)

Developer Outreach: PayPal, MasterCard

PaidPiper was once the poster child of MasterCard's work with small developers, but the company launched its product last year without MasterCard because it needed more flexibility. PayPal similarly saw developers drift to other, more nimble partners. Both companies have since endeavored to improve their outreach through hackathons and, in PayPal's example, the $800 million acquisition of rival Braintree.

Lesson Learned: Startups move fast, and they are not afraid to leave even the biggest brands behind. (Image: ShutterStock)

Payments and Nothing Else: Project Oscar

Project Oscar, a telco-backed mobile commerce initiative in the U.K., initially focused on payments. After facing and being cleared of anti-competition charges, the organization rebranded in 2012 as Weve and broadened its focus to "experiences and ideas across the mobile spectrum," including marketing and couponing. Payments are still a major component, and the initiative recently added MasterCard as a partner.

Lesson Learned: There is more to a mobile wallet than just payments, and it is important to acknowledge this early on. (Image: ShutterStock)