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The most important thing in digital wallets will be identity, not money. If you’re sick of listening to me about this, listen to @Jack.

When I was putting together a few slides on the future of electronic wallets for one of our clients, I thought I would start by lining up a heavy hitter on my side to help convince corporate middle management that wallets are a serious topic and are worth investing time and money in.

Microsoft (MSFT) will introduce its own version of “wallet” software for electronic commerce, but the company does not intend to compete with Internet payment firms, an executive said today. “We are creating a wallet that will allow payment companies to plug in their payment systems,” said Jonathan Weinstein, Microsoft group product manager… “Wallet” software contains a buyer’s payment methods for purchases on the Net, such as credit card numbers, electronic cash, digital IDs, and electronic checks.

[From Microsoft to open digital wallet – CNET News]

Sounds pretty interesting, until you notice that the article is dated 26th March 1997. Seventeen years ago. I’m not picking on Microsoft, I’m just using them as an example. They;re actually doing some interesting work in the wallet world. Last year, one of Consult Hyperion’s top software developer chaps wrote about his experiences at the Microsoft Digital Wallet Foundry in London, working on software for the Microsoft Windows Phone wallet.

The purpose of the Digital Wallet Foundry events is to inspire disruptive ideas about digital wallets in a variety of sectors, and to encourage those ideas to be developed into demonstrators or proof of concepts.

[From Hammering out an app at the Digital Wallet Foundry]

He built a great app, as did others at the event. But I still don’t have a digital wallet that stores my debit card, my driving licence and my bus ticket. Why is this all taking so long? Why don’t I have a mobile wallet on my iPhone right now, from Microsoft or from anyone else? Why did I have to type in my name, address, card number, expiry date and security code into the travel ticketing application that I used this morning?

Payments players with digital wallet aspirations — including Visa, MasterCard, Google, PayPal, Apple and Isis — are all vying for customers’ virtual pocket books in a race to truly electronic transactions. Yet none have had much luck, so far.

[From Digital Wallet Race Is Far From Over – American Banker Article]

The truth is that almost all of the payments that I make with my mobile — recently these have included car parking (RingGo), taxi (Hailo), coffee (Barclaycard OnePulse), bus (Arriva) and my eldest son (Barclays Mobile Banking) — are made using “domain-centric” apps, not payment apps. And what is central to these apps is me. For several of these transactions, I don’t even know how I paid. I can’t remember which cards or accounts I registered or selected and I don’t really want to be bothered about this when I’m doing something like getting on a bus. So long as it’s only me that can use the app, the payment mechanism is essentially uninteresting. Identity is, as they say, the new money. If you are wondering who “they” are people like… well, there’s me, of course, but there are also important and influential people, like Jack.

‘‘It’s not about payment,’’ Jack Dorsey, a founder of Square, a PayPal competitor, says. ‘‘It’s about identity. And it’s about the experience that a merchant can create, which is what actually builds loyalty. We believe that it’s important that the technology, the mechanics of payments, actually fade away to the background.’’

[From EBay’s Strategy for Taking On Amazon – NYTimes.com]

If we’re going to get somewhere with wallets, we need to change our view of wallets. Maybe wallet is an infrastructure built around what we at Consult Hyperion have taken to calling recognition, not an application built around what we have for a long time called payments. As I said a couple of years ago,

The impending wallet wars are about more than control over the consumers’ payments, they are about control over identity.

[From You searched for wallet identity – Tomorrow’s Transactions]

That’s why the tactics around wallets are switching this year and you’ll be reading more and more about the real competition in the wallet world: not between Visa and MasterCard or between Barclays and Lloyds, but between banks and Facebook, telecommunications operators and Apple, retailers and Google.


  1. The VRM boys have known this for a few years now. The trouble is though, who do you trust with all that personal info? Not your bank that’s for sure. Nope – I think you can expect to see a cause related business step in to act as a guardian and trustee of all the personal information that is volunteered by the community to which they belong. And you can expect them to share the proceeds with the individuals in the community which will of course link – like any AVIOS or Air Miles programme – contribution with entitlement.

    Not long to go now.

  2. Great point, Dave. I refer to that as “invisible payments”. The problem lies with how we prevent “Target” scenarios (i.e. devastating zero-day attacks). Our view at TEDIPAY – and we hear that Apple is working on something similar – is: secure h/w linked to bio. It doesn’t take long these days to get a virus onto your phone to spoof “recognition”. Breaking, on a mass scale, through a solution which simply cannot be activated without *your* “mechanical” action is a totally different ball game.

    Unfortunately, it may take the industry a couple of “Targets” to realise that convenience and ubiquity of an app has a dark side to it with serious consequences…

  3. I can totally agree with that Wallets are about recognition, they are also about context. I every context there are other requirements. This is why Wallets like MasterPass offer multiple authentication solutions (online and instore), at least in their roadmaps. The main benefit from the likes of Visa, MasterCard is their possible ability to build an acceptance and issuing network again. The real content should come from issuers building added value on the MasterPass API (not the white label versions).

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