Mobile Wallet Model vs. 4 Different Mobile Payment Models

Columnist Alistair Fairweather recently published an article detailing 4 different Mobile Payments Models. With one caveat, the analysis is one of the best-written and most succinct written on the topic to date; a must read for anyone who wants to take a crash course in Mobile Payments.

Mr. Fairweather clearly indicated that his list was not exhaustive with his comment, “There are at least a half dozen different approaches competing to become the de facto format.” However, the model that is notably missing is one the includes payments as a component, and not the sole function: the Wallet model. The Google Wallet (often categorized as a payment method) uses the ‘Wallet” model,which  produces no revenue for Google directly from payments; the revenue from payments remains intact for the banks, processors and ISO’s and the ‘Wallet’ is simply a form-factor replacement for a plastic card.  But, Google is not a non-profit; they will make plenty of money from this model; Here’s how: 

Google will make its money through prepaid breakage, data mining, and through its ‘Google Offers’ product which will compete directly with the established Loyalty/Rewards industry. Other ventures like ISIS, Visa’s digital wallet, and possibly may create similar revenus models.

So, except for Google and the Wallet Model, in my opinion Alistair Fairweather’s article offers an excellent the overview of different models.  Here is an excerpt:

“Credit cards may be quicker than cheques and safer than cash, but they’re still a pain at times. You and the sales clerk staring at the stupid terminal, waiting for it to spit out that little slip of paper. Wouldn’t it be cool if you could just wave at a sensor, the way access cards for parking garages work?

“Well, that’s exactly what near field communication (NFC) technology does – it turns your mobile phone into a kind of access pass to your bank account. Just wave your phone at a sensor and bingo, you’ve bought a coffee or a movie ticket or a trip in a taxi.

“The Japanese have been using it for well over a decade, but the practice is finally starting to spread to the rest of the world. Orange (a mobile teleco) and Barclays (a bank) launched the first NFC service in the UK last month. A week later, Google announced their Google Wallet service in partnership with Citibank.

“For now these technologies are limited by phone type (Google Wallet only works on the Nexus S) and by network provider, as well as bank. But as soon as the trials begin to show results, we can be sure that everyone else will jump on board. Google already has a brilliant way to enable other Android phones with NFC – a special sticker attached to the back of the phone.”

Read the full article here.

Published by

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.

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