War stories from failed mobile wallets
The recent history of mobile wallets includes a lot of crashes and failures, but the people behind those projects are still around and are wiser for their experiences.
From U.S. collaborative mobile wallet concepts like the U.S. telcos' Softcard, the U.S. merchants' CurrentC or the U.K.telcos' Weve, the lessons learned can prove useful for ongoing ventures, said Kristian T. Sørensen, a partner at Copenhagen-based financial services technology marketing and consulting firm, Norfico, speaking last week in Toronto at Mobey Day.
“We got a lot of valuable information and battle scars from the first round of mobile wallets that didn’t ultimately succeed, and probably the biggest lesson we all learned was that if you’re going to fail, fail fast and move on — a principle the fintech world has embraced,” Sørensen said alongside many of the executives who worked on many of those failed wallets.
Jeppe Dorff was president of Canada’s NFC-based suretap wallet for two years before it flamed out last year, and he said the concept faced immense technical challenges launching with “all the best intentions” of mobile network operator Rogers Communications and Canada’s CIBC as its major banking partner.
“Every day there was some massive new thing that needed to be fixed or changed, such as adjusting to a new SIM card model, or a new bank requirement or handset manufacturers announcing design changes,” Dorff said. “At one point it felt like being attacked from every direction, like we were in a war.”
What ultimately proved untenable for suretap was the need to guarantee each constituent could deliver some added value to consumers above and beyond existing mobile network or banking services, Dorff said. “Everybody was focused on getting some special added value which was always changing, which meant the goal posts kept moving, and there was just too much complexity to it all.”
Banks and mobile network operators made for strange bedfellows that didn’t speak the same language when they first worked together on mobile wallets, Sørensen said. “One sign of the troubles we faced was that telcos were talking about market share, and they didn’t know what the banks were talking about with ‘basis points.’”
Elizabeth “Buffy” Duke said much the same chaos doomed SmartWallet, an NFC-based mobile wallet she helped launch in Singapore in 2012, linking the local StarHub mobile network operator with leading banks to enable consumers to make contactless purchases on local NFC-enabled retail and mass transit.
“In Singapore, banks and mobile network operators put me in the middle, with each side telling me their story and pushing their value-added service, and eventually we were so worn down by trying to pull the mobile wallet itself together that the value-added services went by the wayside — which undermined the concept’s whole purpose,” Duke said.
Softcard, the U.S.-based NFC wallet launched in 2013 by AT&T, T-Mobile and Sprint, failed for some of the same reasons, said Kai Johnson, president of San Diego-based mobile payments consulting firm Sutton Abinger. Johnson played a key role developing systems and architecture for three years at Softcard, which shut down last year when Google purchased its assets, folding them into its mobile payment technology that eventually became Android Pay.
“You had the consumers, the handset makers, the banks and the payment schemes creating a market with at least four sides, and getting everyone moving in the same direction was so hard,” Johnson said. “The consumers were actually easiest; it was getting the banks on board that was hardest of all. Then we had to get the technology to work, and that was really hard, but it worked; then usage numbers were really low. It was hard to say whether it was the technology or the [lack of] collaboration that prevented success, but just like what we saw with [the Merchant Customer Exchange], it was like herding cats.”
The Merchant Customer Exchange, or MCX, was a collaboration of many nationwide U.S. retailers including Walmart, Target and Best Buy. The group's CurrentC wallet never made it beyond the pilot stage, though MCX lives on as a partner of JPMorgan Chase's Chase Pay.
Softcard also suffered from an unforeseen branding issue. At its launch, the telcos' mobile wallet was called ISIS, a name that quickly became toxic as it became associated with the increasingly prominent violent militant group.
It’s also possible that Softcard’s timing was the problem, Johnson speculated.
“Softcard went into things very aggressively and we tried to do a lot quickly, but another approach might have been to spend less money initially and stay around longer. We were too early in the market,” he said, noting that he thinks Softcard’s user interface was superior to many mobile wallets currently operating in the market, including Apple Pay.
The big takeaways from the Softcard experience, according to Johnson, were rich lessons in the challenges of getting multiple partners with different agendas to work together.
“We cleared a lot of trails, and pushed the technology forward and I think we wouldn’t be seeing a lot of the things we have today from Apple Pay, Samsung Pay and Android Pay without all our efforts,” he said.
Establishing global standards around mobile wallets before launching the concepts might have helped, and it could still what’s needed to achieve broad success, said Bjørn Skjelbred, a mobile payments executive who headed of strategy and business development for Valyou, an erstwhile mobile wallet venture launched in 2013 in Norway with Norwegian mobile network operator Telenor and DNB bank.
“There was—and still is—a huge lack of standards [for mobile wallets],” Skjelbred said. “The industry need to sit down together and discuss this, and bring the focus back to shopping. Ultimately the mobile wallet should be about connecting people and getting merchants on board.”