That means issuers, merchants and consumers will be awash in choices and the “wallet in the cloud” will likely become a more common concept, George Peabody, director of emerging technologies for Mercator Advisory Services, suggested during a session on cloud-computer based payment systems at the annual Card Forum and Expo here.
Cloud-based mobile wallets offer certain advantages for storing transaction data and minimizing steps for merchants and consumers, experts say.
While many emerging mobile wallet ventures could ultimately end up as “road kill,” statistics show consumers indeed favor mobile shopping experiences, Peabody noted.
Some 42% of consumers Mercator surveyed recently said they mostly shop online, while only 12% indicated they shop mostly at brick-and-mortar locations, Peabody noted.
The declining excitement about in-store shopping has merchants scared to death, Peabody suggested. As such, they are very interested in exploring new ways to connect with consumers for sales and marketing, including through mobile platforms.
Much of the interaction between merchants and consumers with coupons, shopping lists, product-pricing comparisons and store locations could take place through cloud-based wallets, Peabody contended.
Early entrants in development of mobile wallets such as Square, Inc., PayPal Inc. and Google Inc. have grabbed a great deal of attention so far.
But Google actually has no aspirations to be a payment company, Frank Young, manager of Commerce Business Development at Google Inc., told seminar attendees.
“We want to leverage the power of mobile technology to drive consumers to merchant sites with relevant offers,” Young said. “We are not in it for the interchange, but more interested in driving more business to our advertisers.”
In effect, that summarizes where mobile wallet developers are likely to steer their ships.
While the cloud-based Google Wallet obviously will need a payment function, the overall concept behind the service is to “breathe life” into the shopping experience by enhancing marketing capabilities and other services for merchants and consumers, Young noted.
Uncertainty still surrounds questions such as how consumers may benefit from a cloud-based service versus using Near Field Communication capability on their payment cards or mobile devices, Peabody noted.
When payment credentials are stored in the cloud it allows the consumer to complete a transaction in the most seamless way possible, Young suggested. “Our research at Google concluded that 97% of consumers who start an online transaction don’t finish it,” Young said. “By having the transaction going through the cloud, we are striving toward minimal clicks by the consumer.”
For issuers, payments networks and merchants, a cloud-based wallet provides the opportunity to create a network that removes the “hot spots” where payment card credentials are stored, Young suggested.
“Card credentials don’t need to be stored [in places outside of the bank],” he added. “Soon, with tokenization or reference numbers in the cloud, those card credentials would never have to leave the bank.”