Part two of three.
It’s about more than payments
So who will win the (real) mobile wallet wars? Who can make this vision of future reality? Not the credit card networks as credit cards are only one item in the wallet. Our position is that it has to be about more than payments, and the card networks cannot offer anything more than what they have, which is payments. Not the merchants. Not banks or associations. All of these players don’t have a wide enough charter to make the kind of sweeping impact that’s necessary. Visa wants to make money moving money. Merchants want to sell more products. None of them have a vested interest in changing the way the game is played. What all of the above players can do is help set the tone and standard for what’s to come, but after that, they will be followers, not leaders.
The winners will be — have to be — those that control the mobile device itself. Why do you think Facebook and Amazon tried to get into the business? Apple Pay has been widely hailed as the service that will take mobile wallets over the top. Apple has the influence. The OEMs and OS providers are the only ones besides governments who can make the smartphone into something more that what we think it is today. And let’s all hope that it doesn’t come down to legislation to force standardization and tokenization.
I recognize that some consider Google’s recent purchase of Softcard as a signal that the telcos failed in their effort to compete in the mobile wallet space. Yes, it’s true the telcos can be slow moving, but from a pure business, strategic and investment point of view, getting the leverage through the investment in Softcard to be able to partner with Google (the ONLY player right now the telcos can play with since Apple’s being Apple and taking its ball and going home) potentially makes their three-year payments experiment pay off. Ultimately it’s going to be about more than just payments. It’s going to be about authenticating the holder (or wearer) of the device for a payment transaction, identification, access control, authentication or interaction with another connected device.
The more the makers of the devices and their corresponding operating systems start thinking about these mobile computing devices as THE integral part of the Internet of Things, and start building-in true interactive functionality into the core of the mobile devices and their static counterparts the more interesting the problem becomes and the easier it is to imagine a true digital wallet that leaves the leather in the dust.
But the industry is not there yet when it comes to the standardization of protocols or data formats for different types of information (payment, identification, membership, healthcare, transportation) that people WILL want to have access to on their mobile computing device to interact with the rest of the world. It’s not just about phone-to-phone or tablet-to-phablet-to-watch. It also has to be to POS, to door lock, to NEST controlled thermostat, to TV, to ATM, to ticket kiosk, to hotel key, and to any other IoT connected device. It is about the Internet of Everything, and how we interact with it securely, privately and seamlessly. We cannot have our personally identifiable information out in the clear when we conduct business, but luckily we don’t have to. We can leverage a system that has been in use for years, it just has to be optimized for mobile: tokenization.
Tomorrow, in the final post of the series, we will delve more into tokenization and its role in the future of mobile.