Apple Inc. this fall may take a first step to offering a mobile wallet. Passbook, a feature of its upcoming mobile operating system, iOS6, will enable consumers to store boarding passes, coupons, movie tickets and loyalty card information. Passbook is not yet a mobile wallet because it is missing a mobile payment function, which could come from a number of paths, such as from marrying Passbook to iTunes accounts. Apple has not disclosed details of how Passbook will operate. Apple’s iOS6 will be available this fall for iPhones, iPads and iPod Touch devices.
Apple’s purchase today of AuthenTec for around $356 million may be one sign Apple is looking to turn Passbook into a mobile wallet, or create a separate mobile wallet feature. AuthenTec builds fingerprint recognition technology, which could help alleviate many security concerns around mobile wallets. Unlike passwords and PINs, fingerprints cannot be stolen.
Apple is not the only big technology company with mobile wallet aspirations. Google Inc.’s Google Wallet is more than a year old, and Microsoft Corp.’s Windows Phone 8 operating system, due to be released this fall, will include a wallet feature to enable mobile commerce. With three powerhouse technology companies potentially in the mobile wallet fray, it’s difficult to guess which may reign supreme.
Apple is sharing few details about Passbook and how it might work. On its web site, Apple says consumers using Passbook will be able to scan their iPhones to check in for a flight, get into a movie or redeem a coupon. Passbook also will inform users of a coupon’s expiration date and seat locations within venues. Passbook also appears to have geo-location functionality: Apple says items stored in Passbook will appear on the lock screen of a device as the user walks into a store. For example, a consumer with an iPhone walking into a retailer’s store might see a coupon alert displayed on her phone.
Similarly, Microsoft is not sharing much information about its upcoming wallet feature in Windows Phone 8. On its blog, Microsoft says its wallet enables consumers to store payment card numbers, coupons and boarding passes. The wallet also can be used to pay for merchandise in stores if the smartphone has a Near Field Communication chip. NFC is a two-way communication technology that enables contactless transmission of payment data between two NFC devices, such as a mobile phone and a store payment card terminal.
Launched more than a year ago, Google Wallet is an NFC-enabled mobile wallet available on six phones from Sprint and Virgin Mobile, and the new Nexus 7 tablet, Google says. Google Wallet enables a consumer to pay for goods in a store by waving a smartphone with an NFC chip near an NFC-enabled terminal.
None of these mobile wallets is likely to be an instant hit, experts suggest.
A major obstacle is the sheer number of mobile wallet products, says Oren Levy, CEO of Zooz, a developer of in-app payment technology. “There are so many solutions out there and none have interoperability,” Levy says. “Even if Google Wallet operates on one standard, it only works with Citibank-issued cards on certain devices.” An Apple or Microsoft mobile wallet might have similar restrictions, and would require consumers to register separately with each service, he says. That fragmentation also is confusing to retailers, he adds.
Retailers should not expect a quick or easy path to widespread mobile wallet adoption, says Gwenn Bezard, research director at Aite Group LLC, a financial services consulting firm. “What’s becoming increasingly clear is mobile payments is going to make it,” Bezard says. “It may take a while. It may be messy. It’s not going to come in a simple and clean way.”
That may explain why Apple, in particular, is the most reserved in terms of mobile wallets, Bezard says. “They are not in a hurry to move in the space,” he says. “Of Google, Microsoft and Apple, Apple is moving the most slowly and the most carefully because they probably have more to lose if they were to fail here.”
Google, however, is pushing aggressively, Bezard says, as it does with many technologies, such as its driverless car project. Microsoft is attempting to regain some of its product leadership by potentially leapfrogging its competitors with more features in its mobile operating system, he says.
Mobile wallets, as they mature and more become available, will have to counter the convenience of consumers continuing to pull out their magnetic-stripe payment cards to pay, Bezard says. While the plastic card is working well now, Bezard is confident that consumers one day will embrace mobile wallets. “More and more consumers are open to the considerations of mobile wallets,” he says. Mobile wallets, though, are still very immature, he adds.
Apple is No. 2 in the Internet Retailer Mobile Commerce Top 300 guide.