Mobile wallet rivals will need to put their differences aside and work together to get the technology off the ground, a recent paper says.
Mobey Forum, a global industry association that promotes mobile financial services, this month released a white paper that says competitors will need to join forces to help spur development of mobile-payment infrastructure and agree on standards and service offerings. The forum's members include banks, handset manufacturers and other mobile-payment technology providers.
"Rivals will need to set aside their differences and work together," the authors said. The paper outlines specific areas where participants will need to share resources to help mobile wallet technology take hold around the world.
The paper, "Mobile Wallet: The Hidden Controls," is the forum's third in a series about mobile-wallet development. Earlier this year the forum outlined a general industry roadmap for mobile wallet developers that called for cooperation among players.
In its latest paper, the organization gets a bit more specific in its recommendations and warnings.
For example, the media's recent focus on the competition between a handful of leading mobile wallet apps and the availability of certain compatible devices is wrong-headed, the authors contend.
No mobile wallet should be a standalone system; instead, each should be designed to be open to other wallet systems to encourage broad adoption and interoperability, the authors assert.
"The more open the wallet is, the more likely it is that the consumer will be able to use all their accounts," creating an incentive to switch to it from a conventional wallet, the paper says.
Consumers will require "some more of unique, additional value" in return for changing their behavior, it says.
Moreover, mobile wallets require consumers to agree to divulge more personal information than they did previously, enabling merchants to more accurately tailor promotional offers to them.
The more relevant offers are, the most consumers will be tempted to use mobile wallets, and will simultaneously capitalize on new conveniences, the paper says.
But mobile wallet developers must be careful not to underestimate back-office changes merchants will likely need to execute in order to connect their loyalty programs and promotions to diverse types of mobile wallets.
"Given the wide and disparate array of back end systems in use by today’s merchant community, this will present a huge challenge to the mobile wallet ecosystem," the authors say.
Traditional loyalty programs will likely change dramatically as a result of mobile wallets, but it will take time.
Mobile wallet developers also should ensure international interoperability, the forum urges.
"Just as payment cards can be used in other countries, the mobile wallet will also need to operate internationally," the organization says, noting that consumers will be unhappy to incur high data-roaming charges when using mobile wallets abroad.
One concern for international use is whether mobile wallets will work when switching between various mobile network operators and service providers.
"While Mobey Forum acknowledges that international interoperability is rarely achieved in the early stages of any new technology, there still remains a risk that the mobile wallet will be restricted to local or national use unless these issues are addressed," the paper notes, adding that smooth interoperability for travelers will be crucial in helping to drive consumer adoption.
Despite the obstacles mobile wallet developers face, various wallet schemes have gained "strong traction" during the first half of this year, the forum said.
"Those that are cynical about the rate of progress should be reminded that never before have merchants, banks and payment institutions, payment scheme owners, mobile network operators, device manufacturers, service providers, operating system providers and the considerable number of other stakeholders in the ecosystem had cause to work together to develop a cohesive offering for the consumer," the paper concludes.