Mobile wallets: novelty or necessity?

Making mobile wallets compelling

Furthermore, consumers need an incentive to adopt mobile payment technology. It is not enough that their mobile phone does the same thing as a credit or debit card - it needs to do something extra. This is where retailers have an opportunity to build brand loyalty, by offering customers promotions, coupons or vouchers in connection with their mobile wallets.

“We think of mobile commerce as mobile financial services plus mobile CRM,” says Mallon. “It's not just about the transaction itself but about baking in smart mechanisms for marketing, and mechanisms for understanding what happens post-purchase.”

Sybase 365, which is a subsidiary of mobile messaging and commerce firm Sybase, is working with Telefónica on its mWallet service. Mallon said that the mobile channel opens up new opportunities for interacting with consumers on a one-to-one basis, which can be very hard or very expensive to do via other channels.

“Let’s say I give you a voucher for money off mineral water and you don’t redeem it, next time I'll give you a voucher for a cola or squash. In that way I can collect more information about you, and you’ve got a better deal,” says Mallon. “You have to be careful about this. You can’t just blast stuff out - it has to be relevant. But the real power is to do it with timely interaction that adds value for everyone.”

These use cases just scratch the surface of what is possible with mobile wallet technology. As the technology becomes more widespread, it could remove the cash element from business transactions all together, or be combined with other technologies used in mobile commerce – such as location-based services, QR codes, apps, SMS, Bluetooth and social networks – to create a truly compelling shopping experience.

For example, an SMS-based coupon could be used at the point of sale when the consumer pays for their purchase through NFC, or reading a QR code (a type of barcode that can be scanned using a smartphone's camera) would automatically insert a coupon into the consumer's mobile wallet.

“We are at a market-creating stage. There is a lot of experimentation, and there will be some market shake-up over the next couple of years,” says Dobardziev. “Typically it will be those that make the easiest, most convenient and most attractive platform to the end users, as well as all the partners in the ecosystem, that succeed in this market.”