Plenty of Mobile Wallets to Choose from, but Little Appetite to Use Them ; Most Americans Prefer Cash or Credit Cards to Paying with Their Phones

By Brian X Chen; Jenna Wortham | International New York Times, April 28, 2014 | Go to article overview

Plenty of Mobile Wallets to Choose from, but Little Appetite to Use Them ; Most Americans Prefer Cash or Credit Cards to Paying with Their Phones


Brian X Chen; Jenna Wortham, International New York Times


No company has found the winning combination to transform mobile payments into everyday consumer behavior.

Millions of Americans use smartphones for tasks like hailing a taxi or checking in for a flight. But for buying something in a store? That mostly remains a tech entrepreneur's dream.

For years now, the promise of a so-called mobile wallet -- in which paying in person can be as simple as hitting a button on a phone -- has led to a host of American start-ups trying to cash in.

Those companies, though, have faced nearly as many hurdles as they have competitors, including the most basic ones: Many people are not aware of the new payment systems, others are confused by the many choices, and some see no benefit in the mobile option over using cash or credit cards.

The hurdles have left all the payment companies scrambling to find the code for a profitable business model. And now, a feeling is growing that mobile payments systems will not replace traditional wallets, at least not anytime soon.

"There was the assumption that there was going to be some sort of spark that ignited the marketplace, and there was going to be a mobile payments revolution," said Denee Carrington, a Forrester analyst who studies the mobile payments market. But people do not mind paying with cash or a credit card, she said.

"So this was never going to be a revolution," she said. "It's definitely more of an evolution."

Despite the slow uptake of the technology by consumers, there is no shortage of ways to pay using a mobile phone. Start-ups like Square, Loop, LifeLock and Clinkle offer apps that promise to let smartphone owners pay for products in stores with the tap of a button.

Bigger brands have stepped in, too, offering different types of mobile payments. Samsung Electronics agreed last year to include payWave, Visa's software, on many Samsung phones.

And for years, Google has offered Google Wallet, which allows consumers to load their credit card information into digital wallets so their phones can be tapped on some merchant terminals instead of using credit cards.

Apple has not announced plans to get into mobile payments, but Timothy D. Cook, the company's chief executive, has said that it is an area of interest.

None of the companies, though, have found the winning combination to transform mobile payments into everyday consumer behavior. Gartner, the research company, estimates that worldwide, people spent $235.4 billion through mobile payments in 2013, compared with $163.1 billion in 2012. But that number is much smaller in North America, where consumers spent about $37 billion through mobile transactions in 2013, up from $24 billion the year before.

And analysts say that before the public can be expected to know about and widely adopt mobile payments, some significant problems must be overcome.

As the digital payment world stands now, there are many different parties involved in making the payments work, and they come from different industries and have different interests. The disparate parties include banks, payment networks, retailers, wireless carriers and the companies that make digital wallets themselves.

Merchants who want to accept mobile payments are unlikely to support all the possible types. …

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