Individuals increasingly interact with digital commerce services from many different providers and in many different ways. To reduce this complexity, consumers need a straightforward and consistent approach to organising digital vouchers, loyalty programmes, payment cards, tickets and other items. A mobile wallet can meet that need.
Essentially a digital container running on a mobile device, a mobile wallet is designed to aggregate and manage mobile commerce services, supporting payment cards, tickets, loyalty cards, receipts, vouchers and other items that might be found in a conventional wallet (or purse).
As well as enabling the user to manage a broad portfolio of digital commerce services, mobile wallets are typically designed to enable the user to manage information securely via the SIM card in their device. Although the application may sit on the device itself, the secure data required for payment, access and other services sits within an applet on a secure domain within the SIM. Isolated from other applets, this secure domain ensures that sensitive data for each item in the wallet is protected from fraud and unauthorised use.
A trusted service manager (TSM), in partnership with the service provider, is usually responsible for installing, amending and (where necessary) deleting the customer’s service credentials on the secure domain in the SIM card. This can be done ‘over-the-air’ (OTA), instigated by a simple call to the customer’s mobile operator upon loss or theft of a device.
The user experience
A mobile wallet will enable an individual to easily subscribe to and browse through many services, including payment cards, offers, vouchers, loyalty programmes, tickets and other items they need in their daily lives. Consumers can also typically use services in the wallet to validate tickets, redeem vouchers, initiate transactions, utilise multiple loyalty services and simplify other day-to-day tasks.
In many cases, the wallet will also be able to launch an application from a retailer, bank, transport operator or another service provider, enabling the user to manage a specific service through a dedicated user interface.
The GSMA has developed a standardised mobile wallet architecture to support the efficient deployment of secure and interoperable digital commerce services. To ensure that a service provider’s digital commerce service is compatible with wallets from multiple mobile operators, the GSMA advocates that a mobile wallet should always include certain core features.
The market landscape
A growing number of mobile operators, including AT&T, KT, O2 UK, SKT, T-Mobile USA, Turkcell and Verizon Wireless, and third parties have launched mobile wallets either individually or through joint ventures, such as Isis in the US. According to Berg Insight, NFC mobile wallet services were commercially live in 13 countries worldwide at the end of the first quarter of 2013, up from six countries at the end of 2011.
In June 2013, Berg Insight forecast there will be about 140 companies worldwide using a TSM solution in commercially live NFC mobile wallet services by the end of 2013, up from 57 at the end of 2012. The research firm also forecasts that in-store mobile wallet payments in the EU27+2 will grow from less than €100 million in 2012 to €45 billion in 2017. Berg expects in-store mobile wallet payments will climb to €33 billion in North America by 2017, up from €400 million in 2012.
In June 2013, Gartner forecast that the total value of worldwide mobile payment transactions (both remote and in-person) will reach $235 billion in 2013, a 44 percent increase from 2012. The research firm predicts the number of mobile payment users worldwide will reach 245 million in 2013, up from 201 million in 2012. Gartner also forecast the total value of mobile payment transactions will be $721 billion by 2017.
The GSMA has commissioned research into mobile payment technology – the results can be found under Resources and Information – mPayment.