Amazon’s mobile wallet
Numerous mobile wallets have launched in the past year, but Amazon’s decision to pull the plug on its offering just six months after launch could be the beginning of a shakeout as the primary use cases and leaders become more apparent.
The news follows reports that Google Wallet is considering acquiring Softcard, another sign that competition in the mobile wallet space is beginning to claim some victims. Amazon’s Wallet enabled users to upload card information, display a QR code to debit a gift card or earn rewards and check balances with supported merchants.
“Yes [a shakeout could be underway],” said Tim Sloane, vice president of payments innovations at Mercator Advisory Group. “It probably is not going to have an impact on any of the major banks but it will have an impact on those suppliers that thought HCE would be the break through product.
“It is now clear that NFC is the way it will go,” he said.
“I don’t think this is going to have an impact on MCX. Those retailers are still looking to build a mobile wallet that bypasses the traditional payment networks.”
Bank credentials
Amazon’s wallet strategy raised questions about its viability from the beginning, as many retailers consider the ecommerce giant a competitor and therefore would be unlikely to want to participate (see story).
Amazon’s wallet strategy raised questions about its viability from the beginning, as many retailers consider the ecommerce giant a competitor and therefore would be unlikely to want to participate (see story).
Amazon began informing users by email this week that it is shutting the wallet, which has been in beta since the summer. Users can continue to use the cards stored on the app but can no longer track balances.
“It’s a very different type of wallet than what Apple Pay did,” Mr. Sloane said. “It is almost entirely a closed loop implementation for gift cards whereas Apple Pay has the bank credentials imbedded in the phone.
“I don’t doubt that Amazon thought that their wallet would get to where Apple Pay is with bank credentials, but they don’t own the infrastructure,” he said. “They recognized when they saw Apple Pay, that they couldn’t extend in this way and decided they were out.”
Emerging leaders
Retailers, financial institutions, software companies and others are launching their own mobile wallets to insure they are part of the burgeoning mobile payments landscape. Often these wallets enable users to link one or more credit cards to enable online and in-store payments and are integrated with loyalty offers with the goal of giving consumers a way to leave their physical wallets at home and still be able to conveniently pay for purchases.
Retailers, financial institutions, software companies and others are launching their own mobile wallets to insure they are part of the burgeoning mobile payments landscape. Often these wallets enable users to link one or more credit cards to enable online and in-store payments and are integrated with loyalty offers with the goal of giving consumers a way to leave their physical wallets at home and still be able to conveniently pay for purchases.
Several leaders are likely to emerge in 2015, with Apple having a significant head start given the number of credit cards it already has on file through iTunes, its Passbook loyalty and offers wallet as well as the recent introduction of Touch ID and Apple Pay, which leverages near-field communications technology.
While Apple is an apparent leader on the Android front, there has been a lack of a clear leader on Android. Google appears to trying to position itself to be the leader by courting a deal with Softcard (see story).
If Google were to also integrate its shopping feed data into the wallet, this could position it play a bigger role in mobile-enabled ecommerce.
“Clear leaders will likely emerge and Apple and Google have big head starts,” said Wilson Kerr, vice president of business development and sales at Unbound Commerce, Boston.
“Watch for Google to match their wallet up with their aggregated Shopping feed data, to make a real run at Amazon, for example,” he said.
“And Apple is doing a great job at building banking partnerships to generate a feeling of trust, at the point of sale, as they try to change consumer behavior from ‘swipe’ to ‘tap.’ Upstarts like www.Jet.com are ones to watch.”
Critical mass
As the leaders become clearer, this raises the question of whether there is enough room in the marketplace for multiple smaller wallets? Consumers are unlikely to download multiple wallets and link them to their credit cards when one or two can support most of their needs.
As the leaders become clearer, this raises the question of whether there is enough room in the marketplace for multiple smaller wallets? Consumers are unlikely to download multiple wallets and link them to their credit cards when one or two can support most of their needs.
“While Amazon clearly has a lot of credit cards and address information logged, consumer adoption across other retail platforms is the key to critical mass in the mobile wallet game and Amazon is at a clear disadvantage here,” Mr. Kerr said.
“Amazon should keep their heads down and keep doing what they are doing,” he said. “Until another marketplace emerges with the same breadth and depth and delivers with the same efficiency as Amazon Prime, they are going to do well.”
Final Take
Chantal Tode is senior editor on Mobile Commerce Daily, New York
Chantal Tode is senior editor on Mobile Commerce Daily, New York
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