The Digital Wallet: Promises, Promises

Anticipated rollouts still depend on merchant acceptance

June 9, 2011

The so-called “digital wallet”—consolidating payment, loyalty, and identity information into one mobile and online-enabled solution—has become a sort of “Holy Grail in next-generation payments,” according to Bank Systems & Technology. But the concept has languished as a not-so-distant science fiction that any number of stakeholders has raced to achieve.

In May, Visa Inc. announced its intention to launch an integrated digital wallet this fall—just in time for the holiday shopping season. If successful, the wallet will include an array of cross-channel services that further digitize and simplify online payments. The integrated features could eventually drive adoption of mobile near field communications (NFC)-enabled payments.

Visa is also planning on leveraging mobile messaging technology and e-mail alerts. As an online payments option, consumers will be able to enter payments details into a preference center, choose how they wish to pay—through credit or debit card—and purchase goods online through a streamlined process.

The wallet will be an open system, according to a Visa press release, in that financial institutions and merchants can brand it or extend it as they choose, and consumer payment options won't be limited to just Visa cards.

Going mainstream, maybe

Similarly, Google unveiled its mobile wallet in late May, promising that it would work with existing technology and provide an NFC-enabled mobile payment platform.

But according to the country’s largest terminal maker, the process isn’t that simple.

When Google launched its mobile wallet, it didn’t explain “how much work, how much software, how much testing, and how much integration went on to make this happen,” Douglas Bergeron, point-of-sale equipment vendor VeriFone’s chief executive, tells

Allowing the digital wallet to be accessed at the physical point of sale through NFC technology is essential, and the optimistic view is that payment terminal manufacturers and most handset manufacturers have both been adopting NFC technology in their devices.

The extra functions that appeal to consumers, such as digital coupons, require merchant support. The added functionality and tracking will demand added software, and merchants must see the need to make additional investments, say analysts.

“It’s a conundrum. I’d say hardware is even worse than the software,” says James Van Dyke, president of Javelin Strategy and Research. “We’re talking about several hundred dollars, maybe thousands of dollars, for every one of those registers.”

Another issue is whether retailers should ensure consumers can get a clear wireless signal at the register to enable them to check their balances and access their digital coupons.

VeriFone, for its part, is modifying the aesthetics of its terminals to better encourage the use of mobile payments.

“Merchants don’t want coily cords. They don’t want to turn their countertop, which is the last moment in time with the customer, into what looks like a junkyard,” Bergeron says.

So, despite promises of digital wallets in time for holiday shopping, fully functional mobile payments may still face slow adoption, experts say.