Karen Webster

What Mobile Wallets And Smartphone Cameras Now Have In Common

Guess what?

Apple and Google Android have just recast mobile wallets as smartphone utilities – putting them in the same category as cameras, maps, weather, the app store and any other app that comes preloaded on their smartphones.

Not every mobile wallet, of course, just theirs.

Apple and Google’s recent announcements focused everyone’s attention on the features and functions of their respective mobile payments application - whether they enable private label cards or merchant loyalty programs, at how many locations those wallets are accepted, and how they may interact with other apps like Proactive and Now.

But what has gone unnoticed in the dozens of articles written about their respective announcements is the subtle shift that they engineered from asking users to take an action and download an app to giving them a wallet app outright when they power up their phones.

Naturally, they are hoping that this will give them a leg up in winning the hearts and minds of their respective smartphone user bases.

A toe up, perhaps, but I’m not convinced.

Because if just being “present” on a smartphone home screen were an advantage, iTunes Radio (default radio app for the iPhone) would have been a smashing success instead of struggling to get past 1 to 2 percent penetration. Ping would have hit a home run. Apple Maps would have been a raging success, too, instead of causing iPhone users to scream for Google Maps to be brought back. Apple’s own weather app would also be killing it instead of ceding ground to the Weather Channel or Weather Underground apps.

And, Passbook, Apple’s initial foray into commerce, would have seen far more merchant interest outside of the early adopters.

All iPhone users have had Passbook installed on their phones since 2012 when iOS6 was introduced. And, it’s, of course, the repository in which Apple Pay transactions are visible today. But Passbook was never all that well understood by consumers. It was intended to be a place for consumers to store anything with a barcode – offers, boarding passes, etc. – so that they could be easily accessed and used.

And just like everything Apple, when it launched, merchants stampeded to develop “iPass” enabled offers – that very few consumers ever used – and therefore, very few merchants bothered to devote resources to supporting. It pretty much languished until now.

Rebranding Passbook to Wallet was a pretty brilliant stroke by Apple. It’s finally obvious what that icon is supposed to do – serving as a visual cue that consumers with an iPhone now have a way to use that phone to pay for stuff. One of the biggest issues that our research says gets in the way of Apple Pay usage is that people forget they have it and don’t use it, even when they are in stores that accept it. Having an icon on the phone labeled “Wallet” is at least a step in the right direction to get consumers to remember that they have a mobile payments option available to them.

Android Pay is, naturally, hoping for a similar outcome. Its acquisition of Softcard’s assets gave it access to the U.S. carrier distribution deals Softcard negotiated. That will stick an Android Pay icon on certain Android phones in the U.S. Softcard, of course, had the same deal and came preloaded on certain Android phones – and even claimed some 60,000 monthly downloads at one point.

But being an icon on a phone didn’t really do much to drive its usage, otherwise, there’d be a Softcard mobile wallet in the hunt after 5 years instead of a fire sale to Google earlier this year and a puppet mascot still looking for a home.

So, success for both will mainly come down to the value these mobile wallets provide and the experience that these mobile wallets will deliver to consumers -  since even the apps that consumers take the trouble to download don’t get consumer lovin’ for long.

Nielsen tells us that the typical smartphone owner has about 42 apps on her phone, including the ones that came with it. They also discovered through their research that 87 percent of those users access fewer than 10 apps a day, and about half say they use between one and four. Nearly 70 percent don’t download any apps at all in any given month, according to comScore. Maybe that’s because they’re too busy to look for apps, maybe that’s because they haven’t seen anything that wows them, or maybe that’s because they can’t afford to or don’t want to pay for the data associated with using more apps.

Apple and Google are hoping to appeal to the 70 percent of all consumers who for whatever reason don’t bother with downloading apps by giving them one without them having to do anything at all.

But here’s where a mobile wallet app is different than a weather app or maps or just about anything else that comes preloaded on the phone.

Consumers still have to do stuff to activate those wallets. They’ll do that if they really think that they’ll use them.

On the activation front, both Apple Pay and Android Pay have done and are doing deals with the banks to get consumers over the hurdle of account provisioning. That part is pretty slick and easy - at least for the cards that are already provisioned in iTunes or Google Play. It’s unclear how the process will work for store and loyalty cards. Usage, then, comes down to consumers believing that they will get enough utility out of the mobile wallet to make it worth any effort at all.

And that will all come down to how and where consumers can use their Apple Pay and Android Pay wallets.

Adding loyalty and store options for both Apple and Android Pay can only help since it is an important step to making the wallet more than just a substitute for a plastic card at a handful of brick-and-mortar merchant locations. Locations that Apple says will soon total 1 (really???!) million.**

Since Google’s Android Pay rides those same set of NFC rails, Android Pay users can tap to their heart's content at those 1 (uh huh) million** locations, too.

But getting real usage and adoption will mean being better than the form of payment that consumers are already hooked on and using - digital, mobile or plastic card.

Apple Pay and Android Pay will have to earn consumer adoption. [So, too will every mobile wallet whose name begins or ends with “Pay…”]

And, that will come by having a stellar consumer experience that will get consumers using it which will, in turn, drive merchant interest, which will, in turn, drive more consumer interest.

The challenge that Apple and Google are up against is fragmentation – fragmentation of merchants and platforms for both, fragmentation of operating systems for Google/Android and hardware (handsets and NFC enabled terminals) for both.

Being an icon on a phone’s home screen is one small step for mobile wallet kind. Whether it’s a giant step for mobile wallet ignition is yet to be determined.

The mobile wallets “game” is still very much anyone’s to win.

**We could use a little help here. We did a count based on merchants listed on the Apple Pay webpage and can only come up with ~124k locations including 40k Coke vending machines. Tell us where those missing 876,000 locations are. Apple Pay users want to know. Please help us fill in what we are missing - send us a tweet @pymnts with anything that is available now that we’ve missed so that we can update our page.  The first person to identify 1 million *current* active Apple Pay locations (so 876,000 more) gets a $1,000 Apple Store gift certificate.



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.