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Do You Need a Mobile Wallet?

Now that a group of prominent retailers has announced a plan to embrace mobile payments, consumers are once again facing the Big Question: Namely, is it finally time to ditch that Costanza wallet?

Tyler Olson /

The question, of course, refers to George Costanza, the clueless sidekick of “Seinfeld” fame who carried a wallet so filled to capacity that it finally exploded. In recent years, the big players in the payment industry — merchants, banks, mobile-phone companies — have touted a day when such an overstuffed leather carry-all will become as much a relic as the typewriter or LP.

But even with a new wave of retail giants, including Wal-Mart and Target, entering the digital-wallet space, consumers may still have rightful reason to be skeptical — at least for another year or two — and to hold on to their plastic, say experts who track mobile commerce.

For starters, the problem is one too many competing technologies. In addition to the newly announced Merchants Customers Exchange, the other big names in mobile payments include Google and Isis. A wide-open field poses a dilemma for consumers, since nobody wants to get stuck with the mobile-wallet version of Betamax.

On top of that, the individual payment systems are still going through an extensive period of refinement. When Google Wallet first launched, for example, it worked only with a Citibank-issued card. Just this past month, Google announced it finally expanded to support “all credit and debit cards from Visa, MasterCard, American Express and Discover.”

But limitations of one sort or another still exist with most of the major mobile-payment services — and will continue to do so for a while. For example, not all smartphones work with all services. “It’s just the market shakeout,” says Hank Israel, a partner with Novantas, a prominent management consulting firm.

On top of that, there’s a broader question of whether using a mobile payment system, which requires its own version of “swiping,” is any easier or more convenient than taking out that piece of plastic.

For example, consumers still need to carry a physical form of identification (the mobile driver’s license doesn’t appear to be in our near future). And they still need to carry some cash, since the occasional merchant insists upon it (ever try paying a babysitter with a digital wallet?).

Most important, while mobile commerce is gaining ground — transactions are expected to grow from $172 billion in 2012 to $600 billion in 2016, according to Gartner Inc. — thousands of merchants are still not equipped to accept mobile payments, making it harder for consumers to leave the credit cards at home.

Plus, the leather wallet has one distinct advantage: It doesn’t require a battery. Even a digital-wallet fanatic is “always going to want some kind of backup,” says Daryl Colwell, a vice president at MediaWhiz, a digital media agency.

If there’s good news for consumers, however, it’s that as retailers embrace mobile commerce they could be offering deals of all sorts as part of the formula, experts say. Think “instant” coupons or other offers, designed to trigger a last-minute purchase.

And just as retailers will offer shoppers a special one-time discount for signing up for an in-house credit card, they could do the same with a mobile-wallet platform.

Mr. Colwell believes it’s this sort of promotion that could ultimately make the mobile wallet a mainstream consumer reality. “As long as there’s a big incentive for shoppers to jump on board, they’re going to jump on board,” he says.


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    • We already use Mobile Wallets in Japan. We have since about 2005-2006. We call it Osaifu-keitai (Osaifu=wallet, keitai=cellphone). However it’s a little bit different.

      One big difference is I can use mine even when my phone is dead. But also applications for different cards (point cards, credit cards, train cards) are done separately but access the same chip. To choose what I want to pay with I just simply tell the cashier the card I wanna pay with and lay my phone on the scanner. The entire bottom of the scanner glows green or blue and makes a particular “beep.”

      I usually use my Suica, which is actually my train card. All ticket gates have FeLiCa(NFC) readers, I swipe when I go in and out, it calculates my fare and deducts from balance. I can reload my mobile suica with my bank account or credit cards, or with cash at a convenience store. Most people however use Suica cards (or Pasmo, Icoca, or some other)….all cards were developed separately but nowadays they are all seamlessly linked, and work for most railway companies (we have many in Japan). Also vending machines and stores near train stations often take Suica as payment. We can use our phones or train cards to pay.

      The system has taken off in that it is used in many places, but it hasn’t in that many Japanese are cautious to use it. This maybe comes from credit cards not being common here. They aren’t rare here, but people prefer cash. There is very little crime here, and merchants hate the fees payed to Visa, mastercard, JCB etc. so it tends to only be at convenience stores or big department stores. However people still tend not to use it. Also debit cards are not issued as a standard with bank accounts. We have cash cards, which is used to access that banks ATMs to withdraw/deposit money or wire money. People are cautious to use something electronic because the feel like they can’t feel their money so they can’t control it.

      I think NFC has huge potential in the US. However I think it’s gonna have a much slower start because of all this division. There needs to be a unified or mostly-unified system that works for everyone with set standards used by all mobile payment providers. This makes it easier for retailers to install equipment, and less confusing for consumers.

    • This wallet is clleray well made and looks like lasting longer than my last one. But it appears to be designed for non-UK bank notes so some notes (eg 20 pounds) protrude very slightly even when pushed down as far as they will go. It is also fiddly to open up when in a hurry. But it looks smart and easily fits in trouser pocket.

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