Who will win the digital wallet wars?

The winning digital wallet will need to do more than payments, CeBIT panellists said.

Consumers will have to choose among a a plethora of competing digital wallets for some time until a leader can emerge, payment industry officials said this week at the CeBIT Future of Payments conference in Sydney.

Banks, telcos and Internet companies like Google are among those who will fight the war to have the default app for mobile payments, they said.

The goal of the digital wallet is to mirror a real wallet, said Visa country manager Vipin Kalra. It can hold credit, debit and store loyalty cards and any other payment methods, he said. Digital wallets are “live in the US today [and] coming to Australia soon”.

A digital wallet leader may emerge later, but “in the short term, there will be a whole bunch of apps,” said PayPal Australia head of mobile business Paul Buchanan. “There isn’t one right now that does it all.” Buchanan said he does not view requiring users to flick between multiple digital wallets as an inconvenience.

Kalra disagreed: “At the end of the day, consumers won’t want to carry too many wallets." The winner will be the wallet that is “accepted by all major merchants,” he said. “Open and ubiquitous acceptance are the two key words that will eventually win the battle.”

Telcos in Japan are fighting hard to win the digital wallet wars, said American Express senior vice president Nigel Lee. However, Buchanan doesn’t believe Australian customers are willing to give that power to telcos. Kalra disagreed, citing people’s willingness to buy prepaid services from telcos.

Kalra said with many concerned about personal privacy, winning trust is key. “Who will consumers trust to keep their information secure?” Banks could have an advantage in that game, he said.

All the panellists agreed that digital wallet makers will have to add functionality beyond payment to win customers.

By combining geo-location functionality from a smartphone, the digital wallet can make suggestions or send coupons based on what store the customer is currently visiting, Buchanan said. Users who add photos of themselves to the wallet may get a more personal service at a café because the images help baristas learn who their customers are, he added.

All digital wallet makers have work to do to convince consumers and merchants to adopt, the panellists said. “The vision around what is achievable through digital wallets is probably obvious to most of us,” Lee said. “The components of that are the challenge.”

Eftpos and Telstra officials said in a previous panel at the conference that it may still be a while yet before mobile payments become mainstream.

A big part of the issue is convincing people to put all their payment and other important information on a mobile in the first place, Lee said. “I panic when I lose my phone … and it doesn’t have any of that. I’d be devastated if I lost it and it did.”

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