How big is the Mobile Wallet

Implications: Besides contactless payment technology, the cellphone “mobile wallet” evolving from online banking requires: 1) retailer adaptation, 2) consumer acceptance; 3) e-marketing alliances. 

Analysis: The high penetration of online banking is viewed as an example for contactless payments using cellphones.  Forrester Research shows that online banking is used by about 35% of U.S. households.  In comparison, the analysis of In-Stat is projecting between 8 million and 30 million mobile customers will be using contactless payments by 2012.  Based on CTIA’s current count of 252,198,196 U.S. mobile subscribers, the contactless payment penetration would range from about 3% to 12%.  The difference is that online banking was driven by the growth of the home computer and broadband access.  And there were efficiencies for both banks and consumers by reducing paper statements, ATM visits, and service center calls.  Contactless payments have the challenge of retailer adaptation and consumer acceptance for the near field communications (NFC) technology.   Retailers have to adapt new point-of-sale (POS) terminals, and consumers must resolve security concerns. 
The contactless payment space is crowded with emerging solutions from Obopay, PayPal, Verrus, FreedomPay, ClairMail and TextPayMe.  The technology includes both NFC deployment and text messaging platforms.  The solutions extend over credit/debit cards, loyalty memberships, parking lot passes, and highway toll readers.  The product trials involve the major financial institutions of Citibank, Chase, Visa and MasterCard as well as the major carriers and handset manufacturers.  AT&T stands out for the trial with Nokia and Visa in the Atlanta Philips Arena, as well as the alliance of Firethorn, CheckFree and Wachovia Bank.  And Qualcomm jumped at the potential of credit chips by acquiring Firethorn for $210 million. 
With the plentiful solutions and trials, the question is how big the cellphone “mobile wallet” will be.  Based on the retailer and consumer challenges, the answer probably is a matter of deep pockets for e-marketing campaigns to attract users.  Contactless payments are accelerated with shopping deals and price savings.  For example, Cellfire accesses Obopay’s Mobile Merchant Platform to send coupons to cellphones to be used at retailers.  But coupons are uncertain as shown by newspaper coupon clipping not being transferred to the Internet printing of coupons.  The better model might be the alliance of Japan’s NTT DoCoMo and McDonald’s for payment and information-capture at McDonald’s stores.  NTT DoCoMo sought the data APRU and subscriber retention.  McDonald’s was striving to launch a membership club, build brand loyalty, and track buying habits for special offers.  The joint venture involved investment funding of 70% from McDonald’s and 30% from DoCoMo.  The alliance became a compelling business proposition for DoCoMo to launch its iD platform for mobile phone-based credit cards, and for McDonald’s to initiate the ToruCa information-capture service at the stores.