A hot phrase in payments in 2012 will undoubtedly be "mobile wallet." Both Google Inc. and Paypal Inc. have released wallets. ISIS, the mobile wallet application company formed by mobile telecommunication companies AT&T Mobility, T-Mobile USA and Verizon Wireless, will launch in 2012. Recently, Visa Inc. revealed the name of its wallet application, V.me by Visa, which the company intends to release in 2012.
Mobile wallets are applications for smart devices that store personal identification, credit, debit and prepaid card information, coupons and other data for use as online or POS payment tools.
Visa is covering its mobile wallet bet by allowing many companies, including Google, Paypal and ISIS, to use its branded cards for their own digital wallet applications. Visa, in an effort to stay with or ahead of payment trends, is offering an open beta developer program for V.me. The developer tools are a way for mobile developers to create mobile applications that integrate with V.me, as well as provide support to game developers looking to sell digital goods and services. There are also tools for large retailers. The developer tools can be acquired at www.v.me.
Visa Head of Global Product Strategy, Innovation and eCommerce Jennifer Schulz noted in a recent blog that V.me "is different than other offerings because it is not online or point-of-sale. It is online and point-of-sale." She added V.me will "provide features beyond payments such as transaction alerts and the ability to receive personalized offers."
V.me will also enable consumers to pay with a new "V.me acceptance mark," which allows purchases to be made without customers having to enter account information and shipping addresses every time.
As wallets compete for the hearts and minds of consumers, the payments industry can only watch to see what consumers will prefer.
ABI Research, in a report released in fall 2011, said consumers "will most likely respond to entities who can aggregate the widest range of payment related 'cards' and functionality as possible - including multiple/competing cards, loyalty and reward programs, and the widest range of offers. Providing this functionality in the form of software and hardware is difficult and it is unclear what entities might best provide mobile wallets to consumers."
"Basically, at the end of the day, every organization is trying to form a relationship with consumers on the phone," payment consultant Paul Martaus of Martaus & Associates told The Green Sheet. "What they are trying to do is get the consumer to commit to putting their payment mechanisms into their wallet."
Martaus also believes people will not settle on a single solution but will also probably carry multiple wallets on their smart devices. The consumer will likely choose which wallet to use depending on how and where they want to make a payment.
But Martaus is not convinced the near field communication (NFC) technology used by most wallets will win the day. "I perceive NFC is suspect," he said. "It seems like a low-tech solution. It doesn't feel like the solution. It feels like a solution."
Martaus sees payment alternatives like Square Inc.'s card reader for smart devices and PayPal's short message service (SMS)-based payment application as viable alternatives to NFC-based wallets like V.me.
He called Square "a rudimentary methodology but one that will become a full-fledged credit/debit card taking device." He believes Square will introduce small merchants to the payment card world but, once the business grows to any size, the merchant will look to ISOs to fulfill their service and credit needs.
He said PayPal is "a wonderful way to get into business - a good training ground for retailers." But he believes retailers and customers will eventually look to ISOs when they "want something a little more professional."
"Visa is hoping to win the hearts and minds of merchants," he said. "I suspect, given the diversity of retail, we are not going to have a clear-cut winner."
Martaus predicts wallets will move to cloud-based technology in the near future when consumers will be able to move their digital money around from holding accounts to payment accounts via mobile wallets.
Dale Laszig, Senior Vice President of Sales for Castles Technology Co. Ltd., said, "We need the ability to react to trends. We need to engage with the consumer. The best solution will be integrated into the fabric of the relationship with the consumer, and the consumer is moving. Visa and MasterCard are very well positioned to see where things are headed. Visa is trying to move people in the right direction. NFC is a better and more secure technology."
Laszig said companies like Visa have little choice but to approach the emerging new mobile payment industry with "a completely blank slate."
"They have to understand the business at the market level and try to co-create at that level using different technologies," she said, adding it will be up to ISOs and merchant level salespeople to gain an understanding of what each of their merchants is trying to do and what the customers of those merchants want.
The new paradigm is engagement, Laszig noted. "ISOs need to understand how to build a platform that will directly engage their merchants' customers - whether that is based on SMS mobile coupons or mobile social media," she said.
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