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A recent article I read talked about how consumers want an E-Wallet.  I bet.  Who wouldn’t.  It would be very convenient to make payments at the Point Of Sale (POS) with you phone.  So chalk up Malauzai on the list of people and entities that want an E-Wallet.  There is a ton of hype around E-Wallet.  That has created the “Myth of the E-Wallet”.  “Darnit, why don’t I have one?” ask many informed community financial executives…

Realities of E-Wallet

Reality #1
The infrastructure in the USA is not ready for E-Wallet.  In the most basic terms, there is one (1) major things that needs to happen.  The POS terminals need to support interacting with a phone. There have been three (3) attempts at this.  The first, thank you Starbucks, uses a QR code, similar to a bar code, to allow the phone to talk to the POS terminal.  This works well but requires the software on the terminal to be updated, which makes it hard to roll out beyond a “closed-loop” environment like Starbucks who can dictate what happens.

The second attempt is NFC.  This uses a technology similar to Bluetooth to connect the phone and the POS terminal. And right now both POS terminals AND Smartphones do not support NFC.  Some do but most do not (thank you Apple).  Lastly and more recently, some clever new startups are using the magnetic field on current POS terminals, which requires a phone to have a special add-on “dongle” which as I understand it, requires a nuclear reactor to power it, and works some of the time, not all of the time…  Not very practical.

Reality #2
The second big reality is this, community credit unions and banks will have an E-Wallet embedded in their Mobile Banking Apps.  The E-Wallet “end-game” will not be a single solution, but rather, like many US-based payment services, it will be fragmented.  Community financial institutions NEED to have an E-Wallet embedded in their apps.  Consumers will use multiple E-Wallets and the Banks and Credit Unions need to be able to play in this space.

Reality #3
And finally, thankfully, community financial institutions can start today in spite of the lack of infrastructure.  Credit Unions and Banks can start to train consumers to think of them when thinking about E-Wallet.  We can get the cards in to the mobile banking apps by launching features like debit card management, which allows a consumer to manage the “behavior” around payments, such as turning the card on and off or asking for an increase so they can spend more money at the grocery store or BestBuy.  We can launch innovative payment services like Picture Pay that very simply solves the biggest reason consumers don’t use bill pay, setting up payees, and prove to the world that community financial institutions are innovative and will be leaders ONCE the E-Wallet becomes a reality.

The E-Wallet will become a reality in the next few years.  The USA will catch up with the rest of the world, where E-Wallets are already a reality, and the infrastructure will mature enough and become ubiquitous enough to make it happen.  And then we will all be happy, making payments with our phones.  This is not a matter of “if”, but a matter or “when”.

Robb Gaynor, Chief Product Officer Malauzai Software robb.gaynor@malauzai.com