Why Mobile Wallets Are Doomed

redletterdave writes: "The other shoe has dropped for Square. The once-hyped mobile payments company is killing off its Wallet payments app and replacing it with a new app called Order, which will allow users to order food and beverages ahead of time at their favorite cafes and restaurants. For entrepreneurs, the concept of a mobile wallet seems so logical that the payments industry looks like it's ripe for disruption. If everybody is always carrying around a powerful computer in their pockets, it's natural to consider loading payment information onto that secure device as an alternative to cash or plastic cards. The problem comes when this logical entrepreneurial spirit merges with an industry segment that is classically illogical. The payments system in the United States is a mess of entrenched interests, fragmented business opportunities, old infrastructure (like point-of-sale systems), back room handshakes and cut throat competition. This behavior is not going to change any time soon, which means mobile wallets like Square are going to continue to struggle — at least until a more legitimate, easy-to-use and cost-effective solution comes along."

Re:WTF does it do for me?

[The Good Reverend]

Where are you buying coffee? All the Starbucks around here have phone scanners on the counter, and the exchange is at least a few seconds quicker than handing over a credit card or dealing with cash (and change).

Re:WTF does it do for me?

[The Good Reverend]

The scanner has a wire long enough to pull through the window, so I don't even need to hand them my phone. That's been the case at every Starbucks drive-thru around here, and even if it didn't, it would still be faster than a credit card or cash/change.

Re:Doomed? They Were Never Viable.

[AmiMoJo]

E-wallets have been popular in Japan for years. They are extremely convenient, especially if you use public transport a lot (and Japan has good public transport). No more messing about with change at the convenience store either. Vending machines take them too. As an added bonus there is no receipt to throw away, that gets stored on your phone/online account automatically as well.

Business users love them because they can easily import the receipts into Excel and file an expenses claim. Everyone else just finds it easier to pay for stuff at the end of the month via their mobile bill, instead of loading up a stored value card or fishing for change every time.

I hate coming back to the UK and having to deal with all this crap just to buy stuff. Some places can just about cope with contactless debit cards now, but if you have more than one in your wallet you have to get it out or a random one will be charged. My phone is nice and separate.

Re:who

[Dan Rowinski]

I am the senior writer and mobile editor of ReadWrite and have been writing about mobile payments for years now. Thank you. And actually, I didn't add that link to the coffee shop, one of my editors must have put it in. What would you like to discuss, Mr. Mopps? I have discussed mobile payments solutions with just about every company that is in the game and many of the analysts firms that follow payments. The harsh reality of the mobile wallet is not something that I pulled out of thin air. My conclusion is based on evidence of consumer usage (both empirical and data driven), the performance of these apps, talking to merchants and other various field research and the actions of the companies for almost five years. Google Wallet? Isis? Square? LevelUp? All have issues affecting adoption ranging from merchant adoption to conflicting industry interests to consumer behavior, privacy and security. What do merchants want? Low interchange rates. What do consumers want? The ability to use a payment method wherever they go while deriving value from it. What do big tech and payment processors want? A slice of the pie and will cut the other company's hamstring to do it. Payments are hard ... for so many different reasons and every single hyped mobile wallet that has been released to the consumer market has, in one form or another, failed. Thank you.

Re:Regular Wallet

[praxis]

I would never hand over an unlocked phone to a police officer so he can take it back with him to his cruiser to "copy down the information".