6 subversions of the mobile wallet

Published
  • January 12 2018, 10:47am EST

Mobile wallets blend together, going so far as to share the same branding pattern — Apple Pay, Android Pay, Samsung Pay, Walmart Pay, etc. — but a few companies are going against conventional wisdom with their own products.

Some of these mobile wallet makers question the need for a "mobile" component, while others attempt to do away with elements such as Near Field Communication technology or ordinary cash. The market for mobile payments is still young enough that any concept could find its audience, so today's oddities might become tomorrow's trendsetters.

This listicle is compiled from reporting by PaymentsSource staff writers. Click the links in each item to read more.

Shoving a mobile wallet into a plastic card

Dynamics Inc. has been committed to bringing high-tech multi-account cards to market for years, but it's tough to sell banks on pricier plastic in the age of mobile wallets and e-commerce.

In unveiling its new Wallet Card, the Pittsburgh-based manufacturer's intelligent card division says it has learned from the recent developments in digital payments. Dynamics went so far as to call its product the first "Internet of Things card" — and true to its name, the card has a direct line to the internet.

Like the company's earlier cards, the new product can rewrite its magstripe to draw funds from more than one account, such as a checking account and a rewards balance. The new product supports EMV and NFC, and it uses a digital connection from Sprint, enabling a lot more.

"Today, a consumer can be watching TV and hear news about a retail or other breach, and then they start looking for their cards to see who to call or what to do," said Dynamics CEO Jeff Mullen. "With the wallet card, they would get a message right on the display of the card that the bank is aware of the breach and has already issued new card codes to your digital card."

That sort of technology can go a long way to help Dynamics break down a wall that has been difficult in the past — convincing U.S. banks and issuers to take a serious look at Dynamics' wallet card, said Thad Peterson, senior analyst with Boston-based Aite Group.

"I was very skeptical when I went in, but this is a physical manifestation of the digital wallet and I was pretty impressed," said Peterson, who attended Dynamics' presentation at the Consumer Electronics Show in Las Vegas. "The fact that it changes with a push of the button, it is pretty impressive because when it changes the account number, it changes the mag stripe, the EMV chip and the NFC as well."

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Making the wallet an afterthought

Perhaps no mobile wallet was launched with as little fanfare as Fitbit Pay. Appearing almost as a footnote to the feature list of the company's new $300 smartwatch, Fitbit's attitude towards payments is extremely subtle.

Fitbit's plans for payments seemed to fall to the sidelines after its purchase of Coin's wearable payments technology in 2016. True to its reputation as a fitness tracker, the new Fitbit device emphasizes its heart rate monitor, GPS, water resistance and coaching features. Eventually the marketing materials mention "Fitbit Pay," clustered in with mentions of app support and a multi-day battery.

Payments have rarely been a selling point of wearable devices. Google's Android Wear platform does not require NFC, and the Apple Watch's support of Apple Pay may be more a quirk of timing than of strategy, since the watch launched less than a year after Apple's mobile wallet.

In the smartwatch market, consumers may not expect a wearable device to support payments any more than they expect their kitchen appliances to. And yet, the card brands are more active than ever in embedding their technology into a dizzying number of internet-connected devices.

Pushing back on NFC, years after everyone else gave in

CVS stores shut off their ability to accept NFC payments shortly after Apple Pay launched. At the time, this move was seen as a contractual obligation to the retailer's support of the CurrentC wallet. But CurrentC never made it out of pilot.

Even the launch of CVS Pay didn't change CVS's antagonistic stance on NFC. CVS Pay, launched in 2016, recognizes that the biggest pain point in CVS stores is not the process of moving money, but the many other interactions that occur at the point of sale.

A customer getting medicine may need to provide a prescription, ID, birth date, PIN, loyalty card and other information before they even get to the payment. By putting all of these things into a mobile app, CVS is attempting to remove every obstacle that leads up to the payment.

This is especially important for CVS, which has focused far more of its mobile development on non-payment services. In 2013, it introduced a 3D shopping feature to its iPad app, which also handles coupons through a QR code scanner.

Walgreens, a CVS competitor, has taken a similar approach to mobile technology. Its 2011 "Refill by Scan" feature lets consumers request prescription refills by scanning bar codes with a smartphone's camera. The Balance Financial Prepaid Mastercard, launched in 2013, similarly streamlines the experience by combining a payments card with a loyalty card.

The payment is a vital part to any such innovation, but it is not an easy part to bring to market. Two gigantic brands, Walmart and Apple, have both had problems getting consumers on board with their branded mobile payment systems. Apple has struggled to gain traction, partly because it gives little control to consumers, issuers and merchants over how to fund its mobile wallet for each transaction. And Walmart Pay struggled at the onset, due in part to marketing and training issues.

Helping the competition

If a rising tide lifts all boats, JPMorgan Chase & Co. may be on to something.

The issuer has debuted a cash-back incentive for credit card customers who pay with a mobile wallet, and it doesn’t matter if the transaction is handled by its proprietary Chase Pay platform or Apple Pay, Android Pay or Samsung Pay.

Chase for the first time has added mobile wallets as one of its rotating quarterly rewards categories, enabling its Chase Freedom credit card customers to earn 5% cash back on combined purchases up to $1,500 during the first three months of 2018.

The move is striking because Chase has poured substantial resources into developing Chase Pay as a unique offering for merchants and consumers. Chase Pay, introduced in 2015, is one of the few mobile wallets developed directly by a bank, and it’s distinguished itself further by forging agreements with merchants like Starbucks and Walmart for in-app and in-store acceptance at a lower, undisclosed cost.

Another differentiator for Chase Pay is its $10 million investment in LevelUp, a loyalty-based mobile payments company based in Boston. LevelUp's mobile wallet uses QR codes, the same system Chase Pay favors.

The promotion could provide some clues about consumers’ awareness of Chase Pay versus the three other wallets marketed by providers outside of the financial services industry, as Chase explores the mobile wallet's role with consumers.

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A mix of two unproven concepts

Many in the payments industry have already treated closed events like concerts and sporting competitions as ideal for new payments technology, ranging from mobile wallets to payment-enabled sunglasses. Such venues are less common as a testbed for digital currency.

Bitcart isn't straying too far from the examples that went before it. It combines the Dash virtual currency — which is similar to bitcoin and allows instant and private peer-to-peer transactions — with Festy, a QR code and NFC powered wristband. Festy is linked to a user's Dash account, and merchants can execute payments in near-real time, cashing out to a desired fiat currency later.

"Virtual currency is not useful unless you can provide a way for people to spend it on something," said Graham de Barra, CEO of Bitcart, a Dublin-based discount gift card platform.

There are a lot of companies developing ways to place payment capabilities inside wearable devices. But consumer adoption of wearable payments is still at the early stage, if not still experimental. The clearest successes are in places where the environment is built entirely around the wearable, such as in Disney World theme parks and hotels.

In that regard, Bitcart has an uphill climb. Not only must it convince consumers and merchants to use a wearable device instead of cash, cards or mobile wallets; it must also convince them to use the Dash currency as part of the process. Neither are new innovations, but neither is widely used at this point.

"This seems to be a mashup of two concepts that have yet to gain traction," said Thad Peterson, a senior analyst at Aite Group. "And the bracelet can only be used at merchants that have chosen to incorporate the offering in their point of sale platform. It makes the challenge of achieving critical mass twice as difficult."

Putting biometric tech into a plastic card

One of Apple Pay's biggest influences on the payments industry is its consumer-friendly implementation of biometric authentication. It's a technology that is still very much married to the mobile device — few other consumer products have or need built-in fingerprint readers — but there are efforts underway to introduce this tech to other portable payment instruments.

Gemalto's biometric payment card authenticates through a thumbprint on a sensor in the exact spot on the card on which most people would place their thumb while gripping it for an EMV or contactless transaction. The concept puts an end to signature or PIN authentication — a notion that by now should resonate with all card issuers, merchants and consumers.

But common sense and business sense don't always align, putting Gemalto in a position of knowing that its dual-interface card will have a hard time building an immediate audience.

In debuting its card with the Bank of Cyprus, Gemalto signaled that its product is viable in today's market. No other bank has to run the risk of being a first adopter.

"It's interesting because the product, theoretically and technologically, is a no-brainer," said Paul Kobos, senior vice president of banking and payments for North America at Gemalto. "People are already using their fingerprints to access their phones and data and to do a transaction through Apple Pay and others."

But a couple of key factors work against a biometric card becoming a standard, Kobos said. Those would be cost and the customer registration process.

"You have to activate the fingerprint at the bank branch through a tablet," Kobos said. "Most larger banks are pushing people to self-service and they don't want customers to have to go to a branch as much."

To that end, Gemalto is working on at-home solutions for storing fingerprint data on the card, such as readers that connect over USB or bluetooth. But that doesn't address the cost banks would incur to issue these cards to a wide audience.

"Cost is definitely going to be a factor," Kobos said. "Cost depends on volume, but in comparing it to a contactless card, it is going to be several multiples of that. The bank is really going to have to believe it will either reduce fraud or the customer perception will be such that they will want to do it."