By 2017, 43 percent of all United States’ smartphone users are predicted to use mobile wallets, up from 20 percent in 2013. The technology is diverse at this time, but eventually may converge in response to consumers’ demands.

“Mobile retailers need to understand that, at the moment, different wallet types will serve their online needs, such as quick checkout options, versus their in-store needs, such as tap-to-pay and coupon-pushing,” said Jennifer Kent, senior analyst, mobile and health research at Parks Associates, Dallas. “Much of this functionality is likely to merge in the future, but no current wallet app truly serves all purposes.”

“Also, depending on retailer type, understanding the different types of mobile wallets can help the retailer prioritize app development resources,” she said. “[For example], a smaller primarily online-based retailer should focus on providing quick check-out options and making its Web sites mobile-optimized, while retailers with a large in-store presence should focus on leveraging mobile apps/wallets to better monetize their retail footprint.”

Payment options
Parks Associates presented the “Transforming Commerce: Mobile Wallets and LBS” report during the Connections Summit at the Consumer Electronics Show in Las Vegas this week.

As mobile commerce continues to grow, merchants and retailers are seeking ways to further improve and streamline mobile payments.

Less than 14 percent of smartphone users in U.S. households with broadband used a bar code-based payment application, such as a Starbucks’ app, in the first quarter of 2013, according to Parks Associates.

About 7 percent, used a tab-based payment app, such as Square Wallet, and about 1 percent used an NFC-based payment app, such as Google Wallet, in the same period.

Starbucks’ barcode-based payment app enables a consumer to scan an item’s 2-D bar code when making a purchase, and then the amount is deducted from the consumer’s Starbucks Card account over the network.

With a tab-based payment app, such as Square Wallet, after a consumer downloads the app, she links her credit card and uploads a photo of herself. When she visits a business, she opens the app, checks in and then selects her purchases. At checkout, the consumer tells the cashier her name and her card is charged automatically.

NFC-based payment apps, such as Google Wallet, enable consumers to simply tap-and-pay at stores where contactless payments are accepted. The purchase can be made with the consumer’s wallet balance or with his preferred credit or debit card.

Google Wallet screenshots

Becoming viable
NFC is not quite the barometer for the mobile wallet market as it once was, according to Ms. Kent.

“Cloud-based options, bar code wallets and new initiatives using Bluetooth Low Energy, such as Bluetooth Smart, mean app developers/retailers have more options,” Ms. Kent said. “The Starbucks app, which is technically a wallet as it stores value in the app and enables mobile payment, is the most successful wallet on the market, but does not use NFC. It’s bar code-based.”

Another deterrent to NFC is the technology cannot be used on iPhones.

There is increasing interest in mobile payments.

Last month, Amazon acquired mobile payments company GoPago, signifying the online retailer’s interest in the mobile commerce space and competing against PayPal and eBay (see story).

While consumers are warming to mobile payments and mobile wallets, they are hot for mobile shopping.

About 50 percent of holiday consumer electronics shoppers in 2013 said they planned to use their smartphones while shopping, according to Parks Associates.

Thirty-five percent said they planned to use their smartphones to look up product information, while 31 percent planned to use mobile apps for holiday shopping.

“We saw mobile apps and social media play an increasingly important role in holiday shopping, with almost one in two holiday consumer electronics shoppers using their smartphones as part of the shopping process,” Ms. Kent said. “More than 38 percent of those planning to spend $1,000 or more were using mobile apps for holiday shopping.”

Consumers need to be further educated about mobile wallet use.

“None of the key mobile wallet stakeholders have spent nearly enough resources education consumers as to the benefits of mobile wallets, and the reasons for taking different approaches,” Ms. Kent said.

Final Take
Kari Jensen is staff writer on Mobile Commerce Daily, New York