Complexity, Lack of Urgency Likely Will Slow e-Wallets

Carl Weinschenk
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Seven Tips to Protect Your Google Wallet

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The early signs for electronic wallets - that the marketplace is taking a long time to develop and that these initiatives won't be overnight sensations - are to be expected. They shouldn't be the causes of undue alarm.

Essentially, there are two elements that will make electronic wallets (e-wallets) a very long-term play. The first is that implementing such systems requires changes and transitions at all levels of the infrastructure. There is point-of-sale (PoS) equipment and functionality that must be built into consumer devices. This is by definition a slow and gradual process.

The other element simply is that it takes most people, outside of early adopters, some time to accept new ways of doing things. This especially is true considering the fact that, for the most part, e-wallets are a replacement technology. There may be some new bells and whistles but, for the most part, they are only replacements for credit cards. The impetus is more convenience than necessity.

Those extras are nice, but aren't nearly as compelling as something that is totally new. For instance, the emergence of consumer GPS during the past decade clearly offered something to the public that it hadn't had before (a way to not get lost). It stands to reason that GPS would catch on much faster even if the consumer element of GPS - something that plugs into the cigarette lighter receptacle in the vehicle - wasn't simpler than e-wallet implementations anyway.

This story in The Globe and Mail describes the situation in Canada, which is about the same as it is south of the border: There is latent demand and significant obstacles:

Factors behind the slow uptake are the lack of available hardware, the need for a change in consumer behaviour and a failure of co-ordination by players in the field, says Krista Napier, a senior analyst in mobility for IDC Canada, a technology market research and consulting firm in Toronto. But she says all of that is beginning to change.

Perhaps the situation is going to change. The New York Times also outlines the obstacles but suggests, through comments from payment terminal vendor VeriFone, that the logjam may be abating. The story does seem to be a bit short of details and seems a bit more wishful thinking than verified progress. It doesn't seem that the problems are insoluble. However, it seems that too many issues remain on the table to say that the battle has been won.

Progress continues, however. PCMag reports that Visa is launching a digital wallet program, V.me, in the United Kingdom, France and Spain this fall. There is no word on when it will roll out in the United States. The project is a bit different than ISIS and Google Wallet, at least according to the story:

Visa refers to its V.me program as a digital wallet, not a mobile digital wallet - a key distinction. Visa claims that V.me will enable click-to-buy on a computer, touch-to-buy for a mobile browser, and wave-to-buy for physical point-of-sale NFC transactions. Rivals, such as Google Wallet, have been primarily oriented around mobile transactions, although Google required all attendees to its Google I/O conference to purchase tickets via Google Wallet.

The bottom line is that e-wallets have great promise that will remain for some time. It be a long while before these initiatives reach critical mass due to the complexity of the task and the fact that life will go on quite well without e-wallets. The good news, however, is that the companies involved have very deep pockets and, no doubt, an understanding that this is a long-term play.

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