In the next 10 years, a number of companies will be competing to deliver the dominant mobile wallet. These companies will be coming from a range of industries, including technology, retail and finance. Whichever company can develop the dominant eWallet will be largely in control of the multitrillion dollar U.S. payments industry.
So who is most likely to produce this primary eWallet? First, the runner-ups:
Although banks would be able to leverage their existing relationships with both merchants and consumers, they have historically tended to be risk-averse and avoidant of technology. A number of merchants, like Starbucks, have already developed their own eWallets, however merchants tend to be too self-centered to prioritize a general product. Startups have the ability to produce innovation without the confines of bureaucracy, however they tend to only achieve widespread distribution once they have been acquired by an established player. Credit card companies have already begun establishing contactless payment technologies, including MasterCard’s PayPass and Visa’ PayWave, however these companies have not worked directly with consumers in the past, so they have already begun partnering with companies that have such experience. Mobile carriers already have experience with processing payments (i.e. phone bills), and, in developing Isis, have even shown a willingness to work together. However, mobile carriers, like banks, tend to avoid innovation, which might provide an explanation as to why Isis has yet to develop anything of use. Finally, PayPal has established itself as the leader in the digital payments realm; however, it has not yet established strong relationships with physical retailers, which will leave PayPal at a disadvantage.
This leaves the leaders of technology, such as Google, Apple, Facebook and Amazon, as the most likely providers of the dominant eWallet.
In the near future, Amazon (with its $34 billion online retail operation) and Facebook (with its 800 million-strong user base) could easily make plays for the mobile-payments pie. But thus far, Google and Apple are leading the charge. They’ve got assets aplenty: great relationships with consumers, more pull with physical retailers than PayPal, an active culture of innovation, and, because they both outfit market-leading smartphones, control over when NFC chips could become standard. (Much of that influence, by the way, has been siphoned off from the once-dominant mobile carriers.) To be sure, there’s much to be worked out–namely, which company will emerge as the mobile-payments victor, which technology it will use (NFC or otherwise), and which partners it will need to pull the whole thing off. But most analysts agree that Google Wallet–with its sleek interface, ad-based business model, and rising adoption rate–is a big, bold step in the right direction.