What’s your wallet made of – leather, or bits and bytes?
At CUNA’s recent Government Affairs Conference held in Washington that was a key question raised among those close to the evolution of payment transactions. While this is no aspersion on the ethics of politicians, it may be augury of a new financial future where traditional wallets and the cash inside them may become less common as the mobile phone preps to emerge as a primary payment tool at the point of sale.
That, expressed by some at the GAC, is the inevitable future of payments. Indeed, it is becoming a reality for PSCU, the St. Petersburg, Fla.-based provider of credit, debit, prepaid, online bill pay, mobile and online banking to more than 1,500 financial institutions.
“At GAC, credit unions kept coming up asking for demonstrations of our new mobile wallet,” said Denise Stevens, a PSCU vice president for innovation and product development.
Stevens said she personally walked more than 50 credit union representatives through the CUSO’s recently announced PSCU wallet. She, along with several of the company’s executives who were doing demos, said interest was very high.
“We call it a mobile container,” Stevens explained, saying that the wallet holds a range of tools and services that could include a credit union’s mobile banking product, location-based couponing, and, eventually, point of sale capabilities where the phone is used as a cash alternative.
That last bit, suggested Stevens, is not quite ready for prime time.
“We want to be early adopters, not bleeding edge,” she said.
PSCU is closely tracking Google Wallet, the mobile payment collaboration involving Google, CitiBank, and Sprint as well as ISIS, the collaboration among Verizon, AT&T, T-Mobile. JP Morgan Chase, Capital One, and BarclayCard, Stevens said. Both projects are in early stages of rollout to consumers.
The PSCU app would be branded as the credit union’s own, and not the CUSO’s, Stevens said. The app will be open architecture, she added explaining that it will be comparatively straightforward to integrate tools from other vendors into the wallet.
Is the market there for mobile wallets?
“We think so,” said Stevens, who indicated that the PSCU product will hit the market this summer.
Mary Monahan, an analyst with San Francisco-based Javelin Strategy + Research, concurred with the optimistic outlook for mobile wallets.
“They now are in pilot stages but they define the new cycle of what consumers want,” she said.
Andy Schmidt, a research director at CEB TowerGroup, a Boston-based research and advisory firm, also agreed on the progression of mobile wallets.
“Digital wallets give consumers the ability to use their phones as they do their physical wallet. It’s the hot topic today,” Schmidt said. “But it is kind of the Wild West out there.”
That is because right now, there is more buzz than there are full scale deployments and more noise than users when it comes to digital wallets.
Still, that shouldn’t be a justification for delay, said Brian Day, an executive with Des Moines, Iowa-based The Members Group, a card processing and payment solutions CUSO serving both credit unions and financial institutions and a wholly-owned subsidiary of Affiliates Management Co., which is owned by Iowa credit unions and their members.
“It is dangerous for credit unions to wait and see what happens with mobile wallets. You want to protect your brand and your customer data,” Day suggested.
Implicit in that is the threat that third parties – from Isis to PayPal – may roll out mobile wallets where their brand is front and center and where they own the customer’s data.
“You want to keep your younger members from running to a Citi that already has a mobile wallet,” Day said. “That is why credit unions need to stay aware of this. You need to stay cognizant of what is happening with mobile wallets.”
Craig Fuller, CEO of TransCard, a Chattanooga, Tenn.-based developer of new payments products, offered similar advice.
“Credit unions should look at mobile wallets as a new product offering where they can bring a rich experience to the consumer,” Fuller said.
Just who will emerge the winner in digital wallets? Some experts share the belief that it is too early to call the fight among the big combatants in mobile point of sale. However, it definitely is not too early to get involved in an early phase of mobile wallet offerings.
“We really are seeing lots of enthusiasm,” Stevens said. “Many credit unions recognize that they need this.”