Mobile Wallets: Don't Give Up Your Regular Wallet Yet
By David Cotriss, Mon Jun 18 00:00:00 GMT 2001

Today's m-wallet is not global or secure enough to gain consumer acceptance - will it ever?

Depending on what part of the world you're in, you might actually like the idea of using your phone to pay for a soda from a vending machine or a parking meter fee - or buying from with your phone. However, for the majority of consumers to accept the idea, a number of issues must be addressed and resolved.

The difficulty of entering your personal information every time you wish to make a purchase is one of the major ones. Fortunately, a number of providers are offering mobile wallets, which store your payment and shipping information and automatically enter it each time you make a purchase.

Market research firm Celent Communications predicts that the value of mobile payments worldwide will grow by 260% annually through 2004, while the number of payments will climb 186%. According to a recent report by Forrester Research Europe, retailers surveyed expect 10% of their sales to be made by mobile payment in three years, and they prefer banks to supply mobile payment solutions.

However, the largest market for mobile payments now and in the future appears to be for digital content. In many parts of Europe and Asia, ring tones and screensavers are common and often charged to users - phone bills. According to Jupiter Communications Senior Analyst Seamus McAteer, Japanese carriers, notably NTT DoCoMo, have demonstrated that a segment of the market will pay for digital content, and that some of this is likely to be replicated in the United States and Europe, but not soon. Selling digital content has largely failed on standard PC's in the United States also, which doesn't bode well for wireless.

Is a PIN number secure enough?

Consumer concern over security must also be addressed. Vikram Chachra, CSO and co-founder of Snaz Commerce Solutions, a leading m-wallet provider, points out that although most information stored in m-wallets today resides in a secure server, so no information is sent over the airwaves or stays on the mobile device, some people will demand more security, such as a PIN number that must be entered for each purchase.

"Carriers need to educate consumers and invest in infrastructure now in order to shift lots of standard net transactions to wireless," says Chachra. He predicts most carriers worldwide will select an m-commerce platform in six to nine months to reach early adopters.

Gartner United States analyst Mike McGuire stresses the importance of partnerships with financial institutions with familiar names to address security. "There's been no major adoption yet by financial institutions and no major standards. Consumers will trust the security of familiar names since they've already established business relationships with them," explains McGuire.

In a similar manner, Qpass, the first voice m-wallet provider, has partnered with carriers to add familiarity. American Express allows use of an existing account on the standard Internet with a unique security code for each transaction - a model McGuire says will be increasingly looked at for mobile commerce, which will be especially important in the United States.

From m-wallets to m-commerce

M-wallets in parts of Europe and Asia will provide a model for the United States and aid m-commerce development there. McGuire points out that mobile payment and shopping must be better than other methods to get outside of a niche market.

Scott Geddes, vice president of mobile communications for Brokat Technologies, a leading developer of mobile payment transaction technology, notes that impulse buys are tempting in the United States. But pre-registration with each merchant is often required, unlike in much of Europe where m-wallets are offered as a menu option on merchant sites or a phone number can simply be entered.

Indeed, purchases of physical goods via mobile will likely focus on time and location-sensitive items such as movie, concert, and plane tickets, and m-wallets will greatly reduce the hassle of such purchases. But for the near future, digital goods will likely continue to dominate.

Talking to your handheld to buy

If there's one thing you probably hate doing when shopping via mobile, or using it for most anything, it's typing on a two-by-two inch keypad. People are used to talking on their phones, and navigating the mobile Internet should be no different. Voice navigation is seen by many as the killer app that will lead to widespread use of the wireless Web - particularly in the United States.

A recent survey by The Boston Consulting Group found that a remarkably large number of owners of m-commerce devices in the United States, Europe, and Asia don't use m-commerce applications, instead using them only for their voice capabilities.

"There's a need to integrate commerce into the existing mobile persona," says Gartner's McGuire.

Voice m-wallet developer Q-pass is banking on the interaction style people are used to on mobile devices to fuel m-commerce. In March 2001, the company unveiled the Talk Wallet, a voice driven wallet that provides back-end storage of payment and identification information.

Sensitive information is entered via the standard Web, and voiceprint identification is used for purchases. PIN numbers may also be used depending on the carrier. "This is a natural fit between voice and commerce," says Qpass vice president of marketing Norman Guadagno. "It will be used mostly for digital goods, but also for tickets and the like."

Significant barriers to voice m-wallets do exist. "People haven't been positive about voice interaction around the world since others can hear, raising privacy issues," explains Gartner U.K. chief analyst Adam Daum. "Even if information being used is not sensitive, you may as well call an 800 number."

McAteer says voice will increasingly become a checkbox feature for wallet providers, but that a user's voice will be properly identified only 99% of the time, causing difficulty getting through for many users. He says impersonation by others to gain access will not be an issue. However, ambient noise could cause difficulty.

Despite the barriers, Guadagno says much wireless use in the United States is in cars and airports, where voice will help greatly. He says the next big wave of voice wallet usage will occur in Europe, with Asia coming later. This makes sense since most voice recognition technology has focused on English and some European languages thus far.

Bluetooth: truly convenient m-commerce?

Imagine being in a store and entering a part number on your handheld, perhaps by voice. At checkout, you simply point your device at a terminal and you're done. No waiting in lines or dealing with insincere clerks. This just might tempt you to give this whole m-commerce thing a try. Maybe.

Many tout Bluetooth as the holy grail of wireless usage, including Registry Magic, which announced a Bluetooth-based payment system in January 2001. The company predicts that every cell phone will have a Bluetooth chip in it after 2001.

"There's a need for higher penetration of Bluetooth technology and access points," emphasizes McGuire. "You also need to be able to prevent nearby users from accessing your data." "Wallets won't go away. You'll still need transfer of payment and other details," says Geddes, adding that widespread Bluetooth rollout will take lots of money and time in any case.

Daum notes that if personal information is stored on the device, Bluetooth will help. However, this is not how most m-wallets work today, and given the security issues, it is not likely to occur in the future. He does see some use for location-specific applications such as airline delays and retail offers, where Bluetooth could make purchases easier. While the technology could trigger purchases with wallets, the impact will not be significant.

Universal commerce, anyone?

It would be nice to be able to use the same device and buy from your favorite store no matter where you are in the world. Ideally, the information in your m-wallet would be used to complete the transaction. But is this practical?

Yahoo appears to be setting a good example for how global commerce should be done in the future. In May 2001, Yahoo finalized an agreement with Visa to make it the default credit card for international versions of Yahoo Shopping, Yahoo Travel, and Yahoo Wallet, covering Asia, Canada, Latin America, Central Europe, the Middle East, and Africa. Yahoo has coined the term "u-commerce," for universal commerce - allowing the purchase of products and services worldwide from any electronic device at any time. As with most mobile ideas that sound great, there are problems with the concept. Networks must allow roaming and connection to the net, which limits the potential immediately. McAteer explains that competition will fragment the market, making standards difficult to achieve.

"You need standards for order forms, servers that talk to each other, and an agreed XML schema," he says, adding that this is impractical given the market. "Furthermore, most sites want to keep visitors buying from them rather than the competition, so they are not likely to open mobile payment options to others," he explains. "A form of global wallet exists in the credit card space, since they can be used anywhere. Location should be irrelevant," explains Geddes. He predicts that the global m-wallet concept will emerge first in Europe in the next year since there is more travel to various countries there, fueling the need.

As you may expect, the emergence of a truly worldwide m-wallet appears to be a ways off.

Looking ahead: A bright future for m-wallets?

Right now, you may have mixed feelings about m-wallets, but if you've tried to buy anything via mobile, you know that the wireless Internet is still in its infancy, whether you're buying digital or physical goods. And the technology will surely continue to improve.

Snaz's Chachra offers the bold prediction that the m-wallet will become mandatory everywhere in the future, providing a standard for mobile commerce. He says wallets are a way to monetize heavy investments made in high-speed 3G networks and are good for customer retention. has its one click shopping that works via WAP, providing a useful model for m-wallets. Microsoft is likely to extend its Passport online wallet to wireless as well. "A similar battle will ensue with wireless as with online payment," says McAteer.

Other countries including Belgium, France, Greece, Luxembourg, and Spain are also behind, predicted to adopt m-wallets the slowest according to Forrester Europe. One only has to look as far as Japan with NTT DoCoMo for a good m-wallet model. But no matter what your attitude toward mobile purchases is now, m-wallets will continue to evolve around the world, it appears that it can only get better from here.

David Cotriss has published over 100 articles, mostly on wireless and new media topics. He has an advertising background and is originally from San Jose, CA. He now resides in sunny Los Angeles, CA. He can be reached at