Response to "A tale of two wallets"

Blog Post created by on Nov 18, 2016

In keeping with my theme of listening to inspiring music while blogging, here's a classic album I have listened to many times, from Miguel Migs, founder of the seminal San Francisco based deep house record label "Naked Music", circa 1999.  Much like deep house, mobile wallet payments have been simmering in the background for years.  2016 has been a banner year for deep house, perhaps 2017 will be the year mobile wallet payments finally sees it's full potential.


This is a smooth and jazzy mix. I hope you enjoy it as much as I have over the years.


Naked Music Recordings Classics Mix by Rob Webster / RobJamWeb | Mixcloud


We recently completed a study of 800 consumers and their attitudes towards mobile wallets.  Read the study here A Tale Of Two Wallets - Vantiv , and my reaction to some questions posed about the study below.


What was the most surprising result of the study?

I am a bit surprised that the older demographic (55+) is not interested in more convenient and secure ways to pay and confused about the options. Overall, the results of the study are not very surprising today, but, if you would have shown me these results as a forecast of where we would be with in-store mobile wallet payments two years ago, I would have told you that you are wrong for a variety of reasons.  It has been over two years since the launch of Apple Pay.  The technology architecture that Apple used to create Apple Pay was innovative in digital payments because it uses traditional credit card rails for acceptance and did not require significant technology enablement in the merchant, acquirer, and card network ecosystem.  For this reason it was deemed revolutionary when compared to other attempts to bring digital payments to the in-store experience.  Many of us in the industry thought that because EMV would introduce friction at the POS, this would drive rapid consumer adoption of this new flavor of mobile wallet.  For a variety of reasons, this bullish outlook has not come to fruition as quickly as we may have thought.


How much does a lack of pain around existing payment methods impact the adoption of mobile payments?

To answer this question, you really need to look at the different use cases for mobile wallet payment acceptance. We break this into 4 areas for the purposes of this discussion:



In-Store payments consumers are accustomed to pulling out their credit card and swiping.  This is such a force of habit, to break this pattern is going to take significant perceived or real benefit to the consumer.  If the experience of tapping and paying worked seamlessly everywhere you shopped, and EMV card transactions were universally mandated, you might see people shifting to tap-and-pay because it is so much quicker and easier.  The reality of the situation is that tap-and-pay is anything but uniformly deployed.  The "false-start" penalty, or the fear of it not working keeps people from using this as their preferred payment method.


Loyalty, rewards, coupons and offers are an area where the wallets can provide real consumer benefit and convenience in areas that they care about.  Apple Pay and Android Pay have new technology that allows merchant loyalty and rewards programs to be hosted in the respective wallets.  Apple calls their technology "VAS Protocol" (Value Added Services), and Google calls their technology "Smart-Tap".  Both of these technologies address real pain points at the In-Store POS.  The key uses cases these address are 1) Enrollment into the merchant loyalty/rewards/coupons/offers program, 2) Insertion of the program into the mobile wallet 3) Auto-presentment at the point of sale.  With this technology you can enroll into the program, have the program credentials automatically stored in the mobile wallet, and then when you use your mobile wallet to pay, the program is automatically presented to the merchant without any additional steps required from the consumer.


For In-Store transactions, merchants will need to have consistent user experiences, knowledgeable staff, and offer an integrated mobile wallet loyalty, rewards, coupons or offers program in order to create a value proposition strong enough to get consumers over the barrier of it's just easy enough to swipe or insert my card.



For a merchant developing an iOS or Android App and they want to accept payments, it is far easier to leverage Apple Pay and Android Pay for payments than it is to expect a consumer to manually enter in payment credentials into the app.


Desktop eCommerce

With the launch of Apple Pay on the web, it is now possible on you Apple desktop to authenticate an eCommerce transaction using your Apple Pay wallet payment credentials and touch-id.  This is really a slick user experience but there is not a whole lot of pain around desktop based eCommerce today.  Most consumers are habituated with their favorite online retailers, already have cards on file stored, or have their payment credentials loaded into their auto-fill. Additionally, we've all become pretty accustomed to adding a credit card to a new online retailer when we want to buy something on our desktop.  With that said, Iove the Apple Pay on the web experience, I just don't see that there is a whole lot of existing pain for this use case.


Mobile-web eCommerce

This is where I am the most excited about the potential for new use cases and solving real customer pain. I have read that 70% of all web browsing happens on a mobile device.  Shopping cart abandonment averages around 80% for eCommerce as a whole.  The consumer experience of making a purchase on a mobile web browser is terrible.  It's very challenging with the small screen and keyboard to fill out all those form elements and most likely you are not sitting at your desk with a convenient place to pull out your credit card and load it in.  You are probably on a bus, waiting for a friend or doing something "mobile".


With Apple Pay on the web, and Android Pay Mobile-Web launching this year, there is a significant opportunity for retailers to re-invent the shopping cart paradigm.  It is now possible to have a buy-button on the product page.  The customer is able to make a 1-click purchase, anonymously, without any requirement that they have an account with the merchant.  The payment credentials, billing and shipping details are provided to the merchant automatically and securely.


Many people are fully aware of mobile payments, yet they remain hesitant to experiment with mobile payments. What’s the biggest barrier standing in the way?

The largest barrier is merchant adoption, clear and consistent user experiences and staff training.  If it was a more friendly experience to try, more people would give it a shot because it is really cool when it works properly.


What can payments players do today to positively impact mobile payments adoption tomorrow?

We really need to focus on a consistent user experience at the POS.  This means signage, awareness, technical implementations, and staff training.


How do you see the state of mobile payments adoption changing over the next five years?

I see adoption will be on the rise as the mobile wallet players make investments in merchant awareness programs, and merchants make it through all the EMV pain, and start to look for more ways to differentiate the experience of shopping at their stores.  Integration of rewards and loyalty programs into digital wallets will be a key way that merchants attract saavy young shoppers who are aware of the additional benefits of security, and convenience, blended with additional benefits and convenience of adopting and participating in loyalty and rewards programs.


We are also going to see really cool new OmniChannel use cases come out that were never before possible.  We already see some merchants experimenting with ideas such as allowing the customer to scan items with their phone as they are shopping, and then simply pay with their mobile wallet and walk out the door.