Building a Mobile Wallet for the World


If the tech giants get their way, there will no need for wads of cash, stacks of bank cards or elegant leather wallets.

In the seamless mobile-banking futureOpens a new window planned by companies including Apple, Google, Alipay and PayPal, cash and cards will be replaced by mobile wallets. Swiping or tapping a smartphone or scanning a QR Code will pay for travel by train, bus or taxi, for goods in shops and meals in restaurants. Paying online will require a simple tap on a mobile wallet app.

This will make shopping easier and more fluid, reducing the barriers to spending and freeing people from the inconvenience of carrying cash as well as having to remember personal identity numbers and passwords. Theft will become a minor issue – a stolen smartphone is simply canceled, and the mobile wallet with it.

These are early days of the wallet wars for mobile wallet providers as the giants of technology and finance battle for market share with their payment systems. In Europe and North America, the “pays” – mobile wallets including Apple Pay, Samsung Pay and the recently relaunched Google Pay – have yet to make a significant breakthrough with consumers who don’t fully understand how the mobile wallet worksOpens a new window .

By contrast, smartphone payments have streaked ahead in China, where mobile wallets Alipay and WeChat Pay dominate the market, accounting for some $5 trillion in payments in 2016. Alipay is run by Ant Financial, part of the Alibaba e-commerce empire, and boasts 520 million users in China. WeChat Pay, the payment arm of the WeChat social media messaging app owned by Tencent, has about 600 million users.

The two mobile wallets use a system of QR codes – similar to retail barcodes – to pay for everything from taxis and transport to utility bills, shopping and eating out. A QR code for a purchase is created on a user’s smartphone, which the retailer scans with a reader.

Alipay and WeChat Pay have both launched global operations, installing terminals at retailers across Europe and the US – a strategy aimed at China’s huge outbound tourism market, with 120 million visitors traveling abroad each year.

But there’s speculation that the two groups could be looking to market their systems to western consumers, pitting them against giants of mobile payment from Apple and Google to PayPal, the major banks, Mastercard and Visa.

In the latest move in the global payment war, Google is rebranding the Android Pay mobile wallet as Google Pay. It will incorporate the Google Wallet service enabling peer-to-peer payments, which will be renamed Google Pay Send. Parent Alphabet hopes the relaunch will help Google compete with Apple Pay and perhaps build its presence the Chinese market.

But unlike the Chinese, western consumers are reluctant to use mobile wallets in stores. There’s little incentive to whip out mobile phones to make payments when it involves unlocking the phones before swiping.

UK transit authority Transport for London complains that the slight delay caused by travelers having to use fingerprint identification to unlock phones to pass through the barriers of underground metro stations creates significant hold-ups in the crowded system.

Consumers are just getting used to swiping their debit and credit cards and feel mobile wallets offer no advantage. In China, where credit cards have limited distribution, they have been leapfrogged by mobile wallets.

In the US, Mastercard estimates that in-store mobile wallet payments were worth $75 billion in 2017, though it predicts the figure will reach $503 billion by 2020. But other studies indicate that mobile payments are used by fewer than one-quarter of the population in the US and European markets – and even fewer in Germany, where consumers have stubbornly resisted alternatives to cash.

Yet, many in the payment industry believe that mobile devices eventually will become the dominant tool for payments. They foresee a world where the smartphone acts as the portal for all our needs – as door key, payment wallet, passport and identification card. Given the velocity with which technological innovations are being adopted, such a scenario could arise faster than many might imagine.

The fintech industry has attracted billions of dollars of investment over the past five years in the race to develop global payment systems.

Innovation in technology has delivered single dominant platforms across the economy. Uber rules global taxi services; Amazon is the leading e-commerce platform; Airbnb leads property rentals; Spotify is the main music streaming portal; and Netflix leads on-demand video.

Some fintech entrepreneurs believe the platform model will be replicated in the world of payments. They predict the emergence of a limited number of money service platforms that deal with all individuals’ financial needs.

A single operating system for money could embrace salaries, loans, mortgages, pensions, insurance and direct debits, allowing consumers to manage these all on a single financial app. Such a system could build on the experience of China’s mobile payment apps, which in just a few years have moved into most areas of consumer spending.

It’s inevitable that a platform will converge all money into a single operating system. This could come from one of the GAFAs (Google, Apple, Facebook, Amazon), it could be Paypal or Mastercard, perhaps Alipay or WeChat Pay – or it could be a start-up that has yet to emerge.

However, a single dominant money platform could be 10 years away. In the meantime, the global roll-out of mobile wallets is under wayOpens a new window , although the inroads made by Apple Pay, Samsung Pay and Android Pay into China’s market have been limited to date.

These wallets are based on the same near-field communication system used by contactless cards, where communication using radio waves enables the smartphone to be swiped over a card reader.

But China’s consumers are more accustomed to QR codes, which have become dominant there. China Union Pay has an NFC mobile wallet, but it has failed to capture the imagination of the country’s consumers.

Apple Pay launched in China in 2016 and many expected it would provide strong competition to Alipay and WeChat Pay. Some 30 million bank cards were loaded onto it in the first week, according to official Chinese news site

However, the growth of the Apple system appears to have stalled in China, and it has failed to become even one of the top 10 mobile wallets in a market where Alipay and WeChat Pay have 88% market share between them.

Experts say part of the problem is that while Alipay and WeChat Pay can be used on Apple and Android phones, Apple Pay is exclusive to the company’s iPhones, which have a market share below 10% in China.

Mobile wallet apps are also growing in other areas of the world. India’s PayTM mobile wallet has some 200 million customers, while in Africa the M-Pesa mobile wallet has around 28 million users in Kenya and Tanzania and is launching in other markets. The system enables the unbanked population to exchange cash for credits on their M-Pesa mobile app, send money to friends and family, and make payments.

The stakes could not be higher for the mobile wallet brands. Global success will make them the gateway for every dollar, euro, yuan and all the other currencies spent across the globe. Fintech giants will spend the next decade trying to develop the best mobile wallets in order to become the biggest money portals on the planet – but as history shows in the tech space, there will be more losers than winners.