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CoverStory

may be warranted, considering the three leading mobile
companies serving the United States – AT&T Mobility,
T-Mobile USA and Verizon Wireless – have launched the Do consumers trust mobile wallets?
NFC-enabled mobile wallet Isis.
Mobile wallets have been buoyed by
Isis, which took more than two years to build, was officially significant hype over the past few years, but
rolled out Nov. 14, 2013. Customers of the three carriers not much by actual adoption. Nearly every
can choose from more than 40 Isis-ready smartphones and company with a stake in retail payments has
can download the Isis wallet for free from Google Play. one or more initiatives underway to drive
There they can gain access to numerous marketing and mobile wallet adoption, with little success.
loyalty/rewards programs. Toys "R" Us Inc. and Jamba
Juice Inc. stores will be among the first to accept payments Michael Misasi, Senior Analyst at Mercator
from Isis wallets. To stoke consumer interest Isis loaded Advisory Group, believes one reason is that
the wallets with hundreds of dollars in money-saving providers have been fixated on mobile apps
offers, like free Cokes and smoothies. that relieve consumers of the need for physical
wallets. Industry consultant Paul Martaus
Isis is integrated with American Express Serve, a agreed this is a problem. "Consumers do
prepaid card account American Express Co. markets what consumers like to do," he said, adding
to underbanked consumers. JPMorgan Chase & Co. that they're accustomed to pulling cards
also signed on with Isis, offering the option to select from their wallets. As for mobile wallets, he
cardholders. said, "consumers just don't think that way."
"Isis is one of the few truly independent wallets that is not It seems many consumers may also be wary
tied to a specific financial institution, merchant or online of using their mobile devices for payments.
marketing scheme. This wallet-as-platform approach The British firm Consult Hyperion surveyed
positions Isis to unify the consumer experience across the just over 1,000 U.S. consumers, asking which
many developing mobile shopping environments," said companies they trusted most to issue mobile
Rick Oglesby, Senior Analyst at Aite. wallets. Twenty percent said they'd trust
their banks, and 10 percent said they trusted
Neither Loop nor Isis is apt to be the last mobile wallet Google. Mobile providers and national
alternative to seek market share. "We're still very much in retailers were trusted by 2 percent and 3
the early stages of technology development in the mobile percent, respectively. However, 64 percent
payments space," said Michael Misasi, Senior Analyst for said they would never use mobile wallets.
Mercator Advisory Group.
"The survey shows that issuers need to do a
Also jockeying for position is MCX. Formed by a group better job of conveying what mobile wallets
of merchants, MCX hired digital security company are and what benefits they bring," said Dave
Gemalto in early 2013 to create mobile wallet software Birch, Consult Hyperion Associate Manager.
that supports loyalty and customized marketing in
addition to payments. FIS, a leading provider of banking
and payment technologies, was hired to process, route
and settle mobile transactions initiated through MCX.
MCX's founding members are several large retail chains,
which together operate 75,000 stores that ring up more TMG, a card issuing agent for credit unions, supports
than $1 trillion in sales each year. Among them are Wal- MasterPass, a "digital wallet" from MasterCard.
Mart Stores Inc., 7-Eleven Inc., Publix Supermarkets Inc., MasterPass uses NFC, and supports online as well as in-
Sunoco Inc., Target Corp. and HMSHost. person and mobile payments tied to credit and debit card
accounts. It also provides merchants with sophisticated
Many unknowns remain mobile marketing tools. Schmaltz said the rollout of
MasterPass to about 70,000 member cardholders was
Broad-based acceptance is critical to the evolution of timed to coincide with the 2013 holiday season, when
mobile wallets. "You can't have a discussion about mobile e-commerce and mobile sales to U.S. consumers are
payment technology without eventually winding up expected to set records.
in a 'chicken and egg' debate, where consumers are the
chicken and retailers are the egg," said April Schmaltz, TMG opted to tie its mobile payment strategy to
Vice President of Marketing at TMG Financial Services. MasterCard because it "has brand recognition and
"Consumers won't demand a payment technology unless consumer trust to propel their solution to market-leader
it's accepted by their favorite retailers," she said, adding position [and it is] simple for retailers to deploy and
that on the other hand, "retailers won't invest in a payment consumers to sign up," Schmaltz said. MasterCard is
technology unless consumers demand it." also working on several fronts to grow acceptance. "One
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