Mobile Wallet Progress Questioned

Prepaid, mobile conference speakers say merchants, other partners not included

LAS VEGAS -- In what seemed to be a warning to some of the high-profile players in the mobile-wallet space, panelists at the Prepaid Press Expo, a prepaid and mobile payments conference, said several groups--including merchants and ultimately customers--needed to play a bigger role in the process.

Merchants are still looking for the return on investment in the concept of mobile wallets, said panel moderator Jack Williams, president of Paymentcard Services Inc., Fort Worth, Texas. Speaking of his experience at video retail chain, Dallas-based Blockbuster Inc., Williams said, "Merchants care about what drives incremental sales. At Blockbuster, I wanted to know how to get one more video rental out of you."

New payment methods like mobile wallet, as well as new technologies to reduce fraud like Europay MasterCard Visa or EMV, need buy-in from merchants, who ultimately have to invest in point-of-sale (POS) upgrades.

Williams went as far to say that near-frequency communication (NFC) technology, which is the basis of a phone-carrier wallet effort called Isis, as well as other mobile-wallet projects "have no traction."

If any solution is going to succeed, "everyone will have to come to the table--the merchant, the issuer, the acquirer, the processor," Williams told attendees.

Another critical factor is the consumer, said Robert Martin, senior vice president of attended merchant solutions for mobile-services supplier Apriva, Scottsdale, Ariz. "The consumer is asking, 'Why am I going to use it as a payment vehicle instead of debit that already works through a system and my bank?'"

At the end of the day, Martin said, consumers do not care what a retailer pays in merchant fees, "For the consumer, it's about what value do I get?"

Ubiquity is also an issue. For merchants, the issue of contact and "contactless" technologies still has to be resolved in addition to ROI. For consumers, mobile wallets still won't eliminate the need for some kind of card, especially since ATMs will continue to require plastic, Williams said.

Upon taking questions from the audience, panelists tackled the topic of successful mobile-wallet programs, such as the one launched by Seattle-based Starbucks. Both Williams and Martin said that scenario had to be looked at as a single case.

"It's a fallacy to extend [a comparison] to Starbucks," Martin said. "It's a different customer base than the ones most retailers are facing--they have an [extremely] loyal customer and low ticket items."

The Prepaid Press Expo began Monday in Las Vegas, with the Financial Mobility Summit following on Tuesday, with both ending Wednesday.