here is a perception in some parts of the developed world, especially in the
United States, that mobile wallets have not taken off in the desired manner.
For that matter, the system is more widely used in countries like Japan and
South Korea. One of the reasons quoted for this ‘under utilization’ is the fact that
there is lack of corresponding payment system in the stores when people would
look to make use of their mobile wallets. And if more and more people do not
make use of the mobile wallets, the stores do not have the required motivation to
adopt the corresponding systems either. Then usual shoppers do not find the digital
wallets as something that solves the payment problems as it does not offer anything
that is unique and clearly advantageous to the consumers that they can switch
over instantaneously. So there are movements in that country to popularize mobile
wallets. There are now entities that issue certificates of trustworthiness of retailers
so that consumers can have trust and use their mobile wallets at these retailers.
Merchants opted to obtain such certificates since they offered more confidence
among the shoppers, while shoppers approved them because these certificates
provided assurances. There are firms like BizRate, which apart from certifying the
retailers, also share purchasing data with the merchants so that they can better
understand the customers and their preferences. It is estimated that BizRate has
more than one million unique visitors a day. However, there exists some sort of
feeling of ‘hassle’ and ‘mistrust’ for the mobile wallets. A study by PwC showed
that consumers trust their primary financial institutions the most – as many as 50%
of respondents saying so – followed by their credit card companies at 22%, while
mobile operating system providers such as Google came at the bottom at 3%, and
mobile apps were at 2% and retailers just 1%.
But there are efforts by retailers to popularize this medium. For example,
Starbucks revamped its mobile wallet for iOS adding features such as tipping a
favorite barista or ‘shake to pay’, where shaking the phone brings up the barcode
of a consumer’s Starbucks card to make the purchase. The wallet also stores gift
cards and rewards frequent purchases.
Payment system service providers do not totally rule out mobile wallets. They
predict higher rates of adoption worldwide. They also predict that in countries
where the financial infrastructure is still undeveloped or underdeveloped, mobile
wallets are bound to take off. Systems such as Google Wallet have improved their
security features so that one need not be concerned about security issues. Google
embedded a new feature in KitKat 4.4 version of its Android operating system that
effectively bypasses the chip and interacts directly with the checkout terminal.
We in India can justifiably expect mobile wallets will come to stay, for we have
a wonderful mobile penetration, there are parts of the country that still experience
access issues and we are not averse to new processes and methods. The question
that remains is whether we can afford to do all the retrofitting that is required to
make mobile wallets acceptable at the kirana stores as well.