In Pursuit of the Digital Wallet


By Samuel Greengard

Americans aren't particularly enamored with the concept of mobile payments, according to a recent report from IDC. Only 19.3 percent of 2,560 people surveyed said they had ever paid for something with their phone.

The slow adoption rate for mobile payments shouldn't come as a surprise. So far, nobody has assembled the right technology and the right system to make a digital wallet work. Worse, different systems don't work with each other--or with all merchants. Imagine carrying dollars, Euros, pounds, yen, baht and rupees to make purchases at the grocery store, gas station and clothing shop.

Currently, Google Wallet works only on Android phones. Apple is rumored to be developing a Near Field Communications (NFC) chip to enable payments, but that wouldn't help people who didn't have iPhones. In reality, banking is a complex web of transactions that involve banks, credit card processors, POS terminals, ATMs, and other devices, technologies and entities.

Unfortunately, the United States is breathing the exhaust fumes of the rest of the world when it comes to next-generation payment systems. I find it incredible that credit cards lack a PIN and waiters still carry your credit card to the back of the restaurant to process a transaction.

News flash: Most of the world uses highly secure mobile terminals at the table. I guess preventing identity theft and fraud isn't a top priority in the U.S.

But don't mistake lagging adoption with a lack of interest ... or opportunity. When I go to Starbucks, I see a lot of customers using the electronic payment app. Why don't they simply swipe their credit card, which may actually be faster? Because the payment system is tied into the Starbucks' loyalty program and its rewards. Starbucks has closed the loop on multichannel marketing.

Frankly, I'm tired of carrying a stack of credit cards, loyalty cards and other plastic debris in a wallet that's increasingly a pain in the you-know-what. Vending machines, parking meters and retail transactions could all be made easier with mobile payments.

I don't think I'm alone in thinking that most consumers would embrace m-payments, if a viable system existed: one that ties together payments, rewards and incentives.

Let's not forget that ATMs were introduced in the 1960s, but it took about 20 years before they were widely deployed and used. I'm betting that it won't take as long this time around.