I don’t know about you, but in the physical world I have one wallet. Its purpose is quite clear – to hold my money, credit cards, receipts and that odd voucher (which I will forget to use anyway). My wallet tends to get rather thick, thanks to coins and having to keep every receipt when travelling due to tax regulations. So what I really would like is to have a virtual version of this, to eliminate the need to carry around a heavy wallet all the time. Sounds like something that would perfectly work on my cell phone. And from where I’m sitting, others think so too.
However, how many virtual wallets do you need? One, wouldn’t you agree? Why would anyone need more than that?
The Industry, however begs to differ. Google, Apple, and PayPal (eBay) have already introduced their wallet solutions. Now everyone else, from Telco to credit card issuers, to game console developers and social networks (think Facebook’s currency) are coming out of the woodwork. And just recently, Visa with their V.me digital wallet. What is astonishing to me is the naivety (or is it arrogance?) with which Visa is approaching this space. A presentation by Visa just the other day during the FutuRetail made that painfully obvious to me. When I asked the representative what makes V.me different from any of the other virtual wallets on offer he answered: price & brand.
Let’s have a look at the brand argument first.
Wallets are a consumer product. Period. Their success highly depends on the adoption by the consumer and no one else. And therefore brand certainly is important. Visa undoubtedly has a great brand. However, Visa is pretty late in the game and every one of the other credible players have already claimed their stake in the wallet market. PayPal by now dominates the device independent market, whilst in the mobile OS specific market Google Wallet and Apple Passport are the top dogs.
So if Visa wants to win this game they must offer consumers a compelling reason to switch. Just saying we now also store your credit and store card details will not cut it. Why would any PayPal user want to move to V.me?
Also Visa will have a hard time to get retailers on board. They have already spent thousands of dollars to integrate all sorts of payment solutions, and now there is another one that has to be integrated and maintained, as well as having to pay a fee.
From where I stand the only chance for Visa to push this into the market successfully would be to give the integration to all retailers for free, do the integration for them and give them very attractive transaction fees.
Which brings us to price. I can’t see consumers paying for using the V.me wallet. So will retailers pay with transaction fees? I don’t think so. Margins are often already wafer thin and the last thing they need is another company that wants a cut of the ever-decreasing profits. Furthermore, those who thought this was an important ‘value added feature’ to offer will have made their move already, and have integrated another wallet solution. Retailers will be happy to sit back and wait. Visa, however, will need exactly these companies (early adopters) to push their version of wallet into the market. The early majority will only move if they see that the early adopters are successful with it.
So to get back to my original question of how many digital wallets does one need –the answer is still one. If Visa, or anyone for that matter, wants to win in this game they will have to make their offer so compelling that I have no other choice but to use theirs over anyone else’s.
Which wallet do you think I’m currently using the most? PayPal or Google? Think again. It’s ‘Starbucks’. Why? Because it solves my problem of payment and keeping track of my vouchers/loyalty points. Might be that the actual solution will come from someone who actually listens to the end users and not from tech companies, banks or Telcos.
