A new report from management and technology consulting firm Carlisle & Gallagher Consulting Group that examined 20 mobile wallets found that offerings from nonbanks are the current frontrunners, though the mobile wallet wars have just begin.
Carlisle & Gallagher evaluated the wallets based on depth of payment capabilities and ease of the overall consumer experience. The report found mobile wallets from LevelUp, PayPal, Square and Starbucks were the front-runners among current offerings. These mobile wallets were noted for their easy set-up, ease-of-use and ability to tie rewards to payments, among other features.
However, Peter Olynick, C&G’s Card & Payments practice leader, cautions that it's still too early to make definitive conclusions about the mobile wallet market.
"I think of this as lap one of a marathon," Olynick says. "Some of the folks out there have sprinted to the forefront with payment capabilities, some are in the piloting stage, and it is too early to be declaring victors in this type of race. People are just starting now to get a sense of what they want to do."
Olynick says that the mobile wallets that have stood out so far are ones that have an easy user experience and are intuitive to set up and use.
"It shouldn't require an advanced degree from a technology institute to use," he says.
The report looked at mobile wallets that use NFC, QR barcodes and cloud-based transactions, and Olynick believes that it won't be just one type of payments technology that dominates the mobile wallet landscape.
"I really don’t believe there is going to be one technology that will rule them all," he adds. "I think it’s all going to come down to the user experience you offer, the enhancements that are there, if it's intuitive, and if you mitigate security concerns."
Olynick firmly believes that the mobile wallet will become the dominant payments mechanism in the future, and predicts the "tipping point" will be in 3-5 years. He points to a national consumer survey conducted by C&G in April 2012 that found that 48 percent of U.S. consumers were interested in using a mobile wallet.
He says a lot of the enthusiasm for mobile wallets will be driven by the young and the affluent consumers, but it's broad appeal will come from the unique features it can offer that other payment devices can't, such as real-time incentives and the ability to share purchases on social media.
Olynick also notes that people who are interested in a mobile wallet "clearly indicated" they would want one that could store multiple cards from multiple financial institutions, and have more than one payments technology.