Mobile wallet mania is experiencing another surge that some consider overblown.
Microsoft Corp. this week sparked fresh buzz with its announcement of plans to include a Near Field Communication-based mobile wallet in its new Windows Phone 8 operating system this fall.
Though Microsoft is reportedly working with big-name players such as JPMorgan Chase & Co. and the carrier-backed mobile wallet provider Isis on software-based projects, Microsoft so far offers no specifics about whether any banks are agreeable to working with it for full-blown NFC mobile payments.
And even as basic NFC payment systems remain rare at the point of sale, many companies are floating alternative mobile payment systems that may prove too far-fetched to take hold, analysts say.
"Everybody wants to get on the bandwagon but nobody has got the puzzle figured out yet of who exactly will benefit from offering a mobile wallet," Brian Riley, a senior analyst with TowerGroup, said in an interview. "It might be a neat technology, but there is still no obvious, compelling advantage to the proposed mobile wallets that will make a consumer want it."
In particular, Isis raises more questions than answers about how it will benefit participating banks, Riley says.
And Google Inc. has experienced "many mess-ups" in developing Google Wallet, Riley says. But he notes that Google's acquisition in April of prepaid card processor TxVia could be beneficial in helping adapt prepaid accounts to mobile wallets.
Amsterdam-based Cardis Enterprises International proposes a novel mobile wallet scheme that the company's CEO says could revolutionize payments by providing a way for merchants to process small-ticket transactions on an aggregate basis, rather than as costlier credit or debit transactions.
Cardis is pitching a software plug-in to banks and merchant acquirers that could enable merchants to route purchases under a set amount, such as $15, through an application within any mobile wallet. Consumers would load funds to the application within the mobile wallet from credit or debit cards, effectively aggregating small purchases to reduce transaction fees.
Though Cardis has no U.S. clients aboard yet, "there is a lot of interest," says Nebo Djurdjevic, Cardis' CEO.
Cardis worked with with a European bank that created a cheaper option for merchants to handle small-ticket purchases with chip-enabled cards.
Such a scheme would face significant hurdles, Riley says, including the need to recruit masses of merchants and security challenges.
"There are a lot of ideas taking root right now but there is still a lack of clear purpose and value in a lot of these mobile wallet plans," he says.