Some mobile wallets, such as the Starbucks app, have seen more success than others. But in many ways, the best way to judge a mobile wallet's potential is to see how it handles failure.
The LevelUp app, for example, reveals its personality in strange ways. The payments app offers several unlockable rewards for using it at LevelUp merchants, and the final reward changes the color of the point of sale terminal to "Ninja Orange" when you pay — a nod to the company's CEO Seth Priebatsch, who loves orange and prefers to call himself LevelUp's "chief ninja."
Even when the app fails, its personality doesn't. I recently lost my phone's signal while linking a new credit card to the app. Without a signal, the app couldn't verify my card, so it gave me an error message.
The error message said: "ZOMG!"
It then explained what went wrong and let me update my card again. This process worked fine when I tried it a few seconds later with better reception.
LevelUp is applying more than a sense of humor to its problems — it's also in the process of distributing new hardware to merchants, replacing an earlier smartphone-based point of sale device that needed a 3G data signal to work.
A mobile wallet is often only as good as its signal. Mobile apps don't always handle their failures this well as LevelUp's did. The NY Waterway app, which lets commuters purchase fare for the ferry between New York and New Jersey, requires a signal to purchase an e-ticket and then, later, to activate it for boarding. E-tickets disappear after they are activated, so users cannot activate them until shortly before the boat arrives to pick them up.
The problem is: when the boat arrives, the app doesn't always work.
The app's most spectacular failure occurred on April 29, when the underground PATH trains (an alternate route between New York and New Jersey) abruptly shut down, prompting train riders to use the ferry as a backup.
Many of us attempted to use the NY Waterway app to purchase an e-ticket for the ferry, but the app failed to accept our payments. It couldn't even activate existing e-tickets.
"The result, in short, was a mess," NY Waterway said to customers in an email the following day. "While we cannot always mobilize enough additional vessels to deal with an unanticipated complete PATH shutdown, we can do a better job of expediting the ticketing process, staffing additional ticket agents and ensuring the functionality of our mobile ticketing app in times of extreme surges of server activity."
The organization promises a smoother response in the future.
"We have been working for the past several months on a new release of our mobile ticketing app which has as one of its main goals to reduce dependence on connectivity when activating a ticket," the email continues. "NY Waterway App 2.0, which is in beta testing and is expected to be released in the coming weeks, will allow customers the option of storing tickets in the cache memory of their mobile device which can then be activated regardless of server access or connectivity issues generally. Last night's problems would have been substantially alleviated had App 2.0 been available."
App 2.0 hasn't yet materialized. As of this writing, the most recent version of the NY Waterway app on the iTunes store is version 1.253, posted back in January.
Other developers have similarly been forced to adapt mobile payments to situations where a remote server can't be reached.
Groupon's Breadcrumb POS, an iPad app merchants use to accept swiped card payments, added an offline redundancy mode last week. The new mode allows the app to function for up to an hour without a data signal by storing payment details when it detects an outage.
One of Groupon's customers, a bar in Denver called Dram Apothecary, said this feature "saved the day" when the bar's Internet connection cut out during its grand opening.
Shopkick, a mobile rewards provider that added a purchasing function to its app last week, tackled the signal-strength issue a year ago.
Shopkick's app provides rewards to users when they visit certain retail stores. The app detects an ultrasonic signal sent either by a device near the store's entrance or mixed in with the store's background music.
The problem with this setup is many of shopkick's clients provide poor reception within their stores, preventing the app from phoning home to apply the reward.
"A lot of them have thick walls, where you have a lack of connectivity — but your rewards depend on connectivity," Cyriac Roeding, co-founder and chief executive of shopkick, told me last year. "It's a pain point."
To cope with this issue, shopkick redesigned its app to reduce its reliance on remote servers.
"This was a massive engineering effort to make this possible," Roeding told me. "A lot of the processing happens now in the client, on the handset … this was not a small thing."
Shopkick also signed deals with Visa and MasterCard to provide rewards based on the card networks' transaction records. For this system, "all we need is the connectivity to Visa" or MasterCard, Roeding says.
It's encouraging to see mobile developers aggressively fixing their issues. For these reasons I'll keep most of these apps on my phone.
But as for the NY Waterway app? I'd rather swim.
Daniel Wolfe is editor in chief of PaymentsSource and a contributing editor to American Banker.