Consumer data the reason for mobile wallet revolution

There has been a lot of talk in several industries in recent months about the viability of mobile wallet technology, and many companies are concentrating on pushing this kind of purchase into the mainstream.

Companies such as Google, Visa, MasterCard, PayPal, AT&T, Verizon, T-Mobile, and more are now working to develop mobile wallet systems that allow consumers to use their smartphones as wallets, but they're not doing so for the reason many may suspect, according to a report from the tech news site CNET. Instead of trying to make money by processing transactions or otherwise profiting from the purchases themselves, it might be consumer data that is driving so many companies to participate in the mobile wallet industry.

Change of plans?
Google Wallet, which has been on the market for nearly a year at this point, never had any designs on participating in payment processing as a means of making large amounts of money from the new technology, the report said. Similarly, Isis, the joint venture between the nation's three largest mobile phone service providers, scrapped plans to do the same and are now relying on traditional payment processers to do so.

"From our perspective, we leverage the existing processing and fee structures that are already in place," Google Wallet Product Manager Robin Dua told the site. "Processing a Google Wallet transaction fits into the existing fee structure already negotiated. There is a reason that the four-party system for payments works well. Everyone brings something to the table."

Where the money is
What is truly valuable about these purchases, then, is not the small amounts that can be reaped in processing fees from every purchase, but what those transactions can tell companies about the customer, the report said. For example, Starbucks has its own kind of mobile wallet system, which keeps track of data for consumers' store loyalty rewards program accounts.

That program, which isn't tied directly to payments, lets the company know which locations a customer visits, and when, as well as what they bought, the report said. In turn, that data can be used to sculpt more tailored offers such as coupons to those consumers, and perhaps give them greater incentive to become more frequent customers.

These days, given the still-struggling economy, many consumers are looking for any way they can find to save money, and coupons have grown quite popular as a result, the report said. Data suggests that 58 percent of shoppers now use coupons, up 40 percent from the numbers seen just four years ago.

As such, many retailers are now willing to pay more for data on consumers' shopping habits, and that's the kind of information mobile wallet systems may be able to provide them, the report said. Further, these systems giving shoppers the ability to add these types of offers to their mobile wallets, and have the savings deducted automatically at checkout, may be good for consumers because it gives them greater convenience.

Adoption may still be a problem
In general, there are two commonly acknowledged issues that mobile wallet developers may face when they try to roll out the new technology, the report said. The first is that many consumers may simply be hesitant to adopt it. This may be out of concern for security or that they are simply unconvinced of how convenient such a system may be for them. In either case, the only likely cure for this is time; when demonstrable benefits are seen, consumers will be more likely to adopt the technology.

The other issue many see in mobile wallet adoption is that there simply aren't enough options available to consumers right now, the report said. The only major offering currently on the market for a large number of users is Google Wallet, and even that has significant limitations given the lack of smartphones capable of completing a near-field communications transaction. It's believed that Apple's next iPhone, expected to be announced and made available later this month, could come with NFC capabilities, and the company may also allow its Passbook app, which is similar to a mobile wallet, to be associated with credit cards.

Though mobile wallet programs have been noted as being more secure than traditional credit card use, it's still imperative for users to do all they can to protect their finances on their own. This should include checking their credit reports with regularity. Doing so will give them the ability to spot any potentially unfair markings that may be taking a toll on their credit standing. Fortunately, working with a credit repair service may help them to clear up the problems and return their standing to where it deserves to be.

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