Bricks, Not Bits, Will Drive the Mobile Wallet

The most widespread misconception about potential of M-Commerce is that it will primarily be a way to shop online.  But, online retail accounts for only about 4% of all retail transactions today, and will probably grow to about 8% by 2014. While the growth rate is impressive, the fact remains that brick and mortar retailers hold the key to M Commerce, Mobile Payments, the Mobile Wallet.   Even if every bank and credit union in the world enables you to use your Smartphone as a payment device, these applications would be virtually useless if you could not walk into your favorite store and buy something. Acceptance at brick and mortar retailers is key.


According to the US Department of Commerce, online retail sales continue a steep climb. In the 2000, all online retail sales combined total about $27 Billion in the United States. In 2009, that number has grown significantly to $134 billion, which appears to be a significant amount of money. However, compare that figure to the total dollars that were spent in the United States on Visa, MasterCard, American Express, and Discover cards in 2009: $3.5 trillion (Nilson Report, issue #942, February 2010).   That means all online sales combined in 2009 accounted for about 4% of brick-and-mortar transactions.

And, what about growth in the future?  According to Forrester Research in its March 5, 2010 publication (US online reseller forecasts, 2009 to 2014) “US online retail sales are expected to reach $248.7 billion by 2014.”   At best, this figure will represent about 8% of the spending levels in that year on all credit cards combined. So, for most of the next decade, online retail will be important and worth watching, but it’s simply will be dwarfed by the scale of spending at brick and mortar retailers.


Although relatively few people today that are able to use their smart phone as a wallet, what do retailers think about this technology and how do they think it will affect them in the future?

In a word, “transformative.”

Retailers believe that soon and a shopper will be able to walk down the aisles of their stores with their Smartphone in hand and receive targeted messages, information about promotions, and even real-time coupons just by walking by a display on the floor.  Customers using their smart phones to scan a barcode while standing in the store to check the price, compared to other products, even search for current coupons is a reality today and possibly the norm in the very near future.

This is game changing.  There’s a tendency to equate what’s happening in mobile to the changes brought on by the Internet, but they’re actually very different.  The Internet dragged the customer along for a while — it was evolutionary.  Here, consumers are leading the charge. This is happening right before our eyes. We’re standing on the brink of revolutionary change.” – Bernie Brennan, consultant and investor in retail-related technology and the co-author of Branded! How Retailers Engage Consumers with Social Media and Mobility, which is scheduled for release this month.

Thanks to features like texting, GPS and Web browsing, mobile phones have quickly become a necessity many consumers cannot live without. Nearly three-quarters of retailers are exploring mobile strategies, according to a recent survey. However, 62 percent of retailers have either not yet begun or are only in the early stages of planning their mobile strategy. According to the National Retailer Federation’ Mobile Blueprint:

Mobile phones are changing the way retailers conduct business. Because they are always with us—and always on—they connect retailers to current and potential customers regardless of location or time of day. In 2015, shoppers around the world are expected to use their mobile phones to purchase goods and services worth close to $120 billion. In addition, payment for goods or services and money transfers initiated from a mobile phone will reach almost $630 billion by 2014, up from $170 billion this year. There is no doubt that mobile technology for retail is a hot topic worldwide.

New applications that enable mobile marketing and m-commerce are being published almost daily. There are apps that identify and reward shoppers as they walk into a store and others that allow consumers to give and get gift cards, receive personalized offers and monitor their loyalty programs from their mobile devices. There are tools that allow Smartphone users to leverage social features as they shop, and apps that allow consumers to make purchases using only their Smartphone.  And of course, there are applications that allow consumers to pay for their transaction.

Bottom line, the fact that retailers believe in the future of M Commerce, Mobile Payments and the like is good news for anyone who wants to use the services on a regular basis in the future. If the brick-and-mortar retail establishment were not actively looking at the sectors, the sectors themselves would have little chance of succeeding long-term.

© 2010 David Schropfer
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David W. Schropfer

David W. Schropfer is the CEO of SAFE (Smartphone Authentication For Everyone), a cybersecurity company in New York (  Every day, he and his team of professionals keep the people who use The SAFE Button protected from some of the most common traps, hacks and attacks that target computer systems of all sizes. David is the author of the bestselling cybersecurity book, Digital Habits: 5 Simple Tips to Help Keep You and Your Information Safe Online. His previous books, including The Smartphone Wallet and industry whitepapers, predicted some of the biggest trends in the payments, mobile, and security industries.  Since graduating Boston College, David earned an Executive MBA from the University of Miami.