Top Of Phone Wallet

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Credit card marketers are well versed in the concept of the “top of wallet” card.  The idea is simple: With so many Americans walking around with multiple credit (and now debit and prepaid) cards, issuers want their card to be top of wallet — the one that consumers pull out most often when paying for something. 

Although current interest in digital wallets among US consumers is pretty low, there’s a new competitive dynamic that will emerge over the next few years: The desire among providers to be the “top of phone” (digital) wallet. 

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Digital wallets will try to influence consumers’ choice of payment mechanism, as well as what they buy and where. The development of the digital wallet ecosystem — the FIs, merchants/retailers, telcos, and technology companies — will be a critical determinant of what functionality will be provided, how effective the wallet is, and who will and won’t succeed with their digital wallet offering.

If you’re developing a digital wallet today and expect that card emulation is the goal here, you should go back to sleep. If your digital wallet simply stores card numbers, and passwords/IDs and things like that, lean in a little closer so I can smack you upside your head. 

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It’s going to take a while for this competitive dynamic to emerge, though.

I already have six wallet apps on my iPhone. Don’t use any of them. Don’t really know what they do, can do, or should be able to do. 

If you’re reading this, it’s a good chance you’re not normal. No wait, bad choice of words — make that you’re not “average.” You’re probably chomping on the bit to use digital wallets. 

You can loosen your grip on the reins, Bucko, because that horse is trotting — not galloping. 

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Digital wallets are to 2012 what account aggregation was to 2002. 

Back then, when we asked consumers if they wanted account aggregation, they said no. What they were thinking, however, was “WTF are you talking about?”

Some FIs (and at least one technology company) thought back then that account aggregation was something they could charge customers for because they (only somewhat correctly) thought it was painful for consumers to get a consolidated view of their financial lives. 

People didn’t know what account aggregation was back then, and they probably don’t know what it is today, either. What do they know, however, is that their bank or credit union offers something called PFM which gives them an opportunity to link some accounts and see their financial picture. 

It’s not account aggregation they’re “buying” into — it’s the ability to see a consolidated picture. Account aggregation is infrastructure. 

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This is what’s going to happen with digital wallets. 

Nobody really knows what a digital wallet is — there is no standard, predefined, agreed-upon set of functionality. 

Sure, the visionary early adopters — like you — think you know what it is, and what you want it to be. 

But the rest of us don’t. 

One flavor of digital wallet may be Wallabyesque and help consumers choose which card — oops, I mean “funding account” — to use for a particular purpose. 

Another flavor of wallet might focus on protecting and securing someone’s personal information when making mobile payments, and sharing only a specified amount of information with the merchant when making a transaction. 

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Bottom line: The key point is that we’re early in the evolution of digital wallets, but as they mature, different flavors will emerge. The battle will focus on getting your wallet to be the one the most consumers use (in practice, they’re not really going to want to use three or four wallets every day — they may download that many, but not actively them). In turn, that will likely drive choice of funding account. Have fun competing. 

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