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Summary:

Network operators are once again pushing the idea of a “mobile wallet” in an effort to grab a slice of purchases for virtual and physical goods. But they would be wise to view themselves as potential extensions of existing payment systems — not replacements of them.

mobilewallet

AT&T recently launched payment trials to allow its 93 million customers to charge digital content directly to their wireless bills from the sites of some virtual goods vendors. Similarly, Verizon Wireless earlier this year stuck its toe in the mobile payments water with an offering that allows users to charge their phone bills up to $25 a month in digital goods from some undisclosed gaming sites and social networks.

But as I discuss in my weekly column over at GigaOM Pro (subscription required), the problem with most of these kinds of initiatives is that they provide a new “solution” to replace systems that already work just fine. Cash, credit cards and online payment companies are sufficient for most of us whether we’re buying a bike at a brick-and-mortar retailer or a song online. So what incentive is there for consumers to use yet another transaction platform? Network operators and handset manufacturers, by and large, fail to bring anything compelling, innovative or more convenient to the table.

But Sprint may be onto something with its new “Mobile Wallet” feature, which launched a day prior to AT&T’s recent announcement. The offering serves as something of a mobile bridge to my existing financial accounts, enabling me to pay for both digital and physical goods with my phone but have the transactions billed to Visa, PayPal, Amazon, etc., through a single PIN. Sprint’s initiative doesn’t try to replace any billing mechanism. Rather, it extends existing transaction systems to mobile, increasing the carrier’s value to the consumer. The operator becomes a part of the transaction without trying to own the transaction.

Despite the best efforts of carriers and handset manufacturers, there’s little evidence that consumers would rather whip out their phones to transact business online or at the retail counter than use credit cards or cash. So for now, at least, carriers would be wise to follow Sprint’s lead and view themselves not as ersatz billing companies but as extensions of existing payment systems to mobile.

Read the full post here.

Image source: Flickr user kalleboo

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  1. Do you think there is a different value proposition for carriers in markets where there is little usage of credit cards?

  2. I want my carrier to supply only one thing…

    Zeros and Ones.

    Nothing else!

    Carriers are abusing their customer relationship to supply anything else, or to change an OS, or to add applications. The carriers should stay out of it, and just carry the signal without interfering with it.

  3. Near Field Communication Is More Than Just a Mobile Wallet: Mobile Technology News « Saturday, February 19, 2011

    [...] I’ve said before, the concept of an NFC-powered mobile wallet faces plenty of challenges, especially in the short [...]

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