According to Berg Insight, the vast majority of in-store mobile wallet transactions occurred in a Starbucks using the coffer giant’s own smartphone card app. Google Wallet, Square Wallet, LevelUp, Dwolla may be getting lots of media attention, but a single app that lets you buy coffee and pastries at a single business’s retail outlets is ruling the roost.

This is actually less surprising than it might sound. The problems with mobile wallet services today are that you don’t know what merchants will support them and actually closing a transaction with a supporting retailer is often more difficult than it sounds. Also, there’s nothing broken about plastic. In most cases, it’s far easier to whip a credit or debit card out of your pocket than present a QR code or NFC-powered smartphone to a baffled store employee.

On the other hand, Starbucks’ mobile wallet integration is as top down as you can get. You’re pretty much assured you can walk into any Starbucks in the U.S., present your phone and walk out with a mocha latte. Starbucks CEO Howard Schultz recently said that the company is processing 3 million mobile transactions each week, though some of them are on Square Wallet.

Berg, however, views Starbucks more as a trailblazer than the pre-ordained king of mobile payments. As they buy more croissants with the Starbucks app, consumers will want to buy other goods, too. Berg projects the mobile wallet market will grow into a $35 billion market in 2017 (still tiny compared to overall credit/debit card use), but it believes that other digital billfolds — such as Google’s, the mobile carriers’ Isis, and the major retailers’ own MCX – will drive the majority of in-store mobile wallet transactions.

In Europe, the mobile wallet is buried even further in laundry pile. Berg calculated that 29 European countries generated only €100 million (U.S. $130 million) in wallet transactions in 2012. Berg, however, expects Europe to embrace mobile payments more readily than Americans, projecting the wallet market to grow to €45 billion in 2017.

Feature image courtesy of Lucid Design Group and Yehohanan92 via flickr

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McGinnis said that it will soon offer a similar wallet to customers of its other prepaid brand — Virgin Mobile — and it is considering bringing it to the main Sprint brand as well. Sprint also plans to build on Wallet’s initial batch of services, to create what McGinnis calls “a virtual bank” for its customers.

Today, Boost’s Mobile Wallet can transfer funds between accounts, pay e-bills, wire money to physical locations and, with the help of prepaid Visa card, you can make purchases and withdraw money from ATMs anywhere Visa is accepted. Soon Boost’s wallet will let you scan physical checks, depositing funds directly into your wallet account.

But McGinnis said there are other services in the works. He didn’t provide specific deals, but it’s not hard to imagine features like virtual checking accounts or peer-to-peer payments such as those offered by PayPal, Venmo and now Google and Square.

Sprint doesn’t want to become bank itself — that would put it under the regulatory scrutiny of the U.S. Department of Treasury, which Sprint wants to avoid, McGinnis said. Instead, Sprint is working with Wipit, a mobile payments provider focusing on people without bank accounts and credit cards, to provide the financial services infrastructure.

“From the customer’s point of view, it’s kind of a bank in the sky that is Boost backed,” McGinnis said.

Sprint’s wallet is unique because it focuses on what the financial industry calls the unbanked – households that deal almost entirely in cash. Most other wallet and financial services apps are linked to bank accounts, credit and debit cards. This approach to financial services has had a huge impact in other parts of the world and has made Kenyan mobile operator Safaricom the biggest bank in East Africa.

The U.S. isn’t Kenya, of course, but according to a Federal Deposit Insurance Corporation study (pdf), 8.2 percent of U.S. households have no bank account whatsoever, while an additional 20.1 percent of U.S. households have a bank account but also make use of alternative financial services such as check cashing and payday loan companies.

Of the major providers, Sprint is in an ideal position to serve those customers. People who rely primarily on cash naturally gravitate towards prepaid mobile phones, and Sprint is one of the most aggressive carriers when it comes to prepaid. It runs three prepaid brands (Boost, Virgin and Assurance Wireless) and offers pay-as-you-go options on its primary Sprint brand as well. At the end of the first quarter it had 16 million customers on prepaid plans.

While Mobile Wallet’s initial focus will be on those unbanked customers, McGinnis said there is a lot of potential for the app for customers who have traditional bank accounts, especially as Sprint and Wipit add new features to the app. That’s one of the reasons McGinnis thinks Mobile Wallet will be a good fit for Sprint’s contract customers.

Sprint already is working with Google on mobile payments, but McGinnis pointed out that Google Wallet is really a point-of-sale transaction technology linking to credit cards or bank accounts. Meanwhile, Sprint’s Wallet is intended to be a replacement for or a supplement to those accounts and payments cards — just without the actual bank.

“There’s nothing broken with plastic in retail today,” McGinnis said. Sprint, he added, just wants to make that plastic available to more people.

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Mobile Wallet was developed by Wipit, a mobile payments provider for people without bank accounts and credit cards. Its platform therefore makes an ideal fit for many Boost customers who rely on cash to make pay for their wireless service. The approach seems to emulate the mobile payments revolution going on Africa and South Asia, where mobile operators are become bigger financial services providers than the traditional banks.

Mobile Wallet allows you to pay bills and send money to family or friends in 135 countries through Ria’s cash transfer network. Soon Boost will also offer a digital check cashing service, which lets you scan in a physical check and deposit the funds in your wallet account. You can also transfer money between different accounts, and top off your Boost Mobile plan within the app.

What you can’t do is use the Wallet App to make a payment at store. But Boost and WiPit have gotten around that problem by issuing a Visa prepaid card to any customer that signs up for a premium account. The card draws directly from the Wallet account and is accepted anywhere where Visa is. Google reportedly considered adopting the same approach for its digital wallet but dropped the idea.

Of course, all of these services come with fees, many of which are rather steep. Paying bills costs anywhere from $2 to $5 per transaction, while Ria money transfer fees vary depending on amount and destination. Even loading money into the account costs $3, though once the money is there, you can spend it freely using the Visa card. Until the check cashing service goes live, customers can only load money into the account at authorized Boost dealer locations.

The app is available to Boost’s Android customers and is downloadable in Google Play, but initially Boost is only enabling accounts for customers in Los Angles, San Diego and parts of New Jersey. The company is planning a nationwide rollout by the end of the year.

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Bill Ford is, of course, the great-grandson of Henry Ford, and the executive chairman of the company that bears his name. He also co-founded a venture capital firm called Fontinalis Partners that focuses on next-generation mobile technologies. Fontinalis is leading a $2.8 million investment round in Masabi with participation from London’s MMC Ventures and existing backer m8 Capital. The company has already gone through several funding rounds, raising $2 million in 2010 and $4 million in 2011. m8 led both rounds.

London-based Masabi said that the strategic investment is aimed at promoting its mobile ticketing technology to U.S. transit agencies, building off of its success in the U.K. (it has 13 transit contracts across the pond), and its recent deployment with Boston’s Massachusetts Bay Transportation Authority. To date, the company claims it has processed $50 million in ticket sales worldwide and $3 million alone from the MBTA since its system went live in November.

Masabi’s key product is called JustRide, a cloud-based end-to-end ticketing platform that allows riders to purchase, manage and store transit tickets and passes in their mobile phones. Users can buy tickets from an app in their smartphones rather than wait in ticket lines. For train systems with conductors, the tickets show up as animated watermarks easily identified by ticket takers. For automated ticket systems, the app will display a QR code that will get you through the turnstile. Masabi is also upgrading its software to support near-field communications (NFC) in the future.

Boston, for instance, still utilizes smart card ticketing – which also can be linked to JustRide platform – but the gradual move of its smartphone-toting ridership to the cloud-based ticketing service saves it millions of dollars in ticketing machine and backend infrastructure.

Though smartphone-initiated mobile payments haven’t exactly taken off in the U.S., transit ticketing is starting to become a key component of the digital wallet. The carriers’ mobile wallet Isis may still be limited to two cities, but it’s become popular as a mobile pass for Salt Lake City’s public transit system. Amtrak has started accepting digital tickets on the iPhone, and all of the major airlines now have boarding pass features in their apps.

As for Ford’s interest in public transit technologies, the chairman appears to be throwing his money in the same direction as his rhetoric. Ford has spoken several times about how, at the current rate of growth, the number of cars on the world’s highways would soon lead to massive congestion problems. His proposed answer is coordination between public transit and intelligent traffic management systems to better control of the flow of billions of people as they go about their daily lives.

Fontinalis has invested in many startups designed to make cars smarter such as Streetline, Life360 and Parkmobile, but it’s also invested in companies like Masabi and Wheelz, which go against Ford’s vested interest in individual car ownership.

Bill Ford image courtesy jurvetson via Compfight cc

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BillGuard is announcing Monday that it’s integrating with mobile wallet app Lemon, which means that Lemon’s 2.5 million users will be able to check their card balances and look for suspicious charges through their Lemon app. That follows a previous integration in September with Apple’s Passbook, which similarly enabled people to monitor credit and debit card transactions through Passbook.

Lemon users on iOS and Android who upgrade to the latest version of the app will now be able to see their balance and a list of recent transactions on stored cards in Lemon’s wallet, alongside their other cards, coupons and receipts. BillGuard builds a crowd-sourced database of billing complaint information to protect against fraudulent or hidden charges. Users help BillGuard get smarter by sharing their transaction information and get alerts on questionable activity. Since launching in last year, BillGuard, which hasn’t released user numbers, said it has saved its users more than $1 million.

The integrations with Passbook and Lemon are big opportunities for BillGuard to expand its mobile presence and pull in a lot more data from mobile users. Passbook lets BillGuard reach a lot of iPhone users and now with Lemon, which is not tied to one platform, BillGuard can reach tons of Android users as well. BillGuard plans a mobile app later this year.

BillGuard support provides a nice boost to wallet apps like Passbook and Lemon, showing how they can be a daily tool for consumers. Users are still figuring out the value of a mobile wallet, which many people think of in the context of payments. As Passbook and Lemon demonstrate, there’s a lot of opportunity in replicating the other parts of a wallet, including storing identity and loyalty cards to presenting receipts, tickets and coupons. BillGuard can also help consumers prepare for a mobile wallet future, giving them some assurance that they have more tools to keep track of all of their transactions.

BillGuard started out as a consumer-facing service but it’s now also courting banks, which will offer BillGuard services to customers. Yaron Samid, BillGuard’s CEO and founder told me the company is close to announcing its first big banking customer soon. The company has raised $13 million to date from Khosla Ventures, Peter Thiel’s Founders Fund, Eric Schmidt’s Innovation Endeavors, Bessemer Venture Partners and IA Ventures.

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Now there’s a new player in this space. Actually, that’s not quite right. Germany’s Giesecke & Devrient is 160 years old, and has traditionally been best known as banknote printer and (more recently, obviously) a smartcard security firm. You might know them as the company behind the nano-SIM.

On Thursday, G&D announced its own mobile wallet play, named SmartTrust Portigo. In common with most mobile wallet schemes, it’s NFC-based. What’s interesting about it, though, is the breadth of functionality that it promises to provide.

If G&D and its customers follow through, you’ll soon be using your phone for not only loyalty schemes and mobile payments, but also as a replacement for ID cards, access keys for buildings and vehicles, and public transport tickets.

This really would be a fully-fledged mobile wallet. In theory.

“Users will find that SmartTrust Portigo, the electronic wallet solution we are launching, is an easy-to-use app,” G&D group SVP Klaus Vedder said in a statement. “At the same time, it opens up a wide range of new opportunities for mobile network operators, banks, and other service providers to develop new mobile services as part of their individual brand strategies.”

But how easy-to-use would it be, and how likely is it that this one-mobile-wallet-to-rule-them-all strategy will become reality?

Users would download a ‘wallet client’ app to their smartphones. The software would establish a connection with a secure hardware element and a ‘wallet manager’ in the mobile network’s systems. It would then be up to the ‘wallet issuer’ to deploy services to the app in the form of widgets – perhaps one for a virtual credit card, one for public transport, and so on.

For ease of use, though, the question is the identity of the wallet issuer. If this is all done under the name of the mobile operator, the secure element will be the SIM card, in which case it’s all fairly straightforward. If the wallet issuer is a bank, though, they might want the secure element to be on a microSD card, which would involve a bit more hassle. And then there’s the motivations of the wallet issuer to consider – how much do they want to control and how many partnerships do they want to strike?

Whose wallet?

In some ways, it makes a lot of sense to have one entity managing all these different functionalities. In theory, it would make it easier to block all the services if the phone gets lost or stolen, and to re-initiate them when a replacement device is in hand.

But, that said, a single point of control can become a single point of failure.

It’s worth noting that G&D has a pretty close partnership with ARM and the digital security firm Gemalto. Back in April, the three set up a joint venture in Cambridge in the UK, in order to set up a single standard for a trusted execution environment for ARM-based devices. That was essentially ARM’s answer to Intel’s $7.7bn McAfee takeover, which had a similar idea in mind, only for x86-based devices.

So if anyone’s going to do this securely, it would be G&D. The question, though, is how G&D’s customers choose to implement this spin on the mobile wallet, and who gets to control what. It would be great if the mobile phone really could provide all these different functionalities at once, but that’s a future at the mercy of commercial negotiations.

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Consumers interested in Isis will need to head down to their carrier store to either buy an Isis compatible NFC-enabled phone or check if their phone is among the nine supported devices. They will also need to get a new SIM card from their operator to enable touch-and-go payments from their phone.

Some of the supported phones include: Samsung Galaxy S III, Galaxy S Relay 4G and Galaxy S II on T-Mobile and the Droid Incredible 4G LTE on Verizon. The Droid Razr HD and Droid Razr Maxx HD should also be ready this week at some point. AT&T will support the Galaxy S III, HTC One X, Samsung Exhilarate, LG Escape and Samsung Rugby Pro. Later this year, the HTC Amaze 4G and Samsung Galaxy Note II will support Isis on T-Mobile.

After downloading the Isis app from Google Play, users will be able to load up their American Express, Capital One or Chase credit card. Or they’ll be able to use an Isis Cash card, which can be pre-loaded from any credit or debit account. While shopping in a store, users will be able to tap their phone and pay at participating locations and also store and use coupons, offers and loyalty cards from retailers. If you’re in Austin or Salt Lake City, you can check here to see what locations support Isis.

Isis said it expects to have another 11 phones ready to go on the system by the end of the year. Salt Lake City users will also get free rides on UTA buses, Trax and Frontrunner vehicles through January 31, 2013. We’ll have a hands-on look with Isis tomorrow from my colleague Stacey Higginbotham, who will be testing out Isis in Austin.

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For businesses that utilize Placecast’s ShopAlerts offers, they now have a way to not just walk someone into a store, but they can measure how effective their marketing is when a user redeems an offer by card. Placecast said it is only charging for marketing when a consumer actually buys something in store.

For consumers, it allows them to use a piece of plastic that most people are very comfortable using. They’ll be able to take advantage of discounts that offer a certain amount back in credit on their card statement for buying a product or spending a certain amount in store.

Placecast has more than 160 customers who have used its ShopAlerts including AT&T, Starbucks, L’Oreal, The North Face, Subway, Pizza Hut, Kmart and HP. In June, it rolled out ShopAlerts Wallet, which allowed companies to integrate ShopAlerts into their mobile wallet apps or into a newly built mobile wallet built from a Placecast template.

While linking payment cards to offers is increasingly popular, Placecast said it’s able to apply real-time location data, consumer preferences and spend history to tailor the offers and make them relevant for users. It’s also utilizing a new patent that allows it to match a store’s location with the transaction data from processors, card issuers, retailers and mobile wallet providers. A store’s location can be marked differently in various databases, leading to failed redemptions because the location data isn’t consistent.

Consumers still need to opt in for these offers and they will have to be relevant and interesting to get their attention. But this combination of location-based offers and simple redemption could be very powerful and attractive for marketers. If marketers can actually target people near their stores, lure them in with an offer easily redeemed through their card and only pay once a transaction is completed, it solves a lot of their problems.

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