by Donna M. Airoldi | January 19, 2012
Mobile payments make up just one piece of the big e-commerce pie. Innovative transaction-processing companies are betting on applications that offer many more conveniences: mobile wallets.

These apps not only turn smartphones into virtual pocketbooks that let shoppers easily pay for goods and services by just tapping their phones on point-of-sale (POS) devices or by inputting their phone numbers and PIN codes. They also store multiple gift, loyalty, and credit cards; receive and redeem coupons and other sales promotions; earn and redeem reward points; integrate with social media sites; purchase and store event tickets; and connect to location-based services for geographically targeted offerings.

Aside from the convenience of not having to carry around cash and all those cards, consumers can benefit from receiving real-time personalized promotions and more effectively manage and redeem their rewards.

“Mobile payments are really going to be powerful and change the way we think about the whole rewards and redemption experience,” says Carlo Pirillo, vice president of digital for Maritz Canada and Maritz Loyalty Marketing. “The beauty of the mobile wallet is the insight you can gain around the behavior of [participants] by having that communication mechanism in conjunction with the payment mechanism. Today a customer can be in one of your aisles, in front of an item on sale, and compare your competitor’s sale. Yet a lot of programs still don’t even optimize emails for mobile devices. That’s a big flaw. [Mobile] is a powerful tool, and as an engagement mechanism, it needs to be used accordingly.”

Still, mobile wallets are in their infancy and a few years away from widespread use. “We’ve looked at mobile wallets, but I don’t think in the near term that consumers will take the time to scan plastic cards into their phones or key them in, which is what most will have to do,” says CashStar CEO David Stone. “That’s asking the consumer to do too much. But when [electronic delivery] gets bigger, that will make it easier.”

But if the success of Starbucks’ mobile payment app is any indication, mobile wallet apps are poised to take off as the technology improves, retailers continue to partner with banks and transaction providers, concerns about security abate, and mobile POS functionality is added to more stores. 

Some mobile wallets use near-field communication (NFC) technology, which employs radio frequency identification (RFID) to connect nearby devices. Consulting company Gartner estimates that nearly half of all smartphones will have NFC capability by 2015. And, according to estimates by the Aite Group, mobile payments are expected to jump from $2.1 billion in 2012 to $22 billion by 2015.

Here’s a rundown of some of the current mobile wallet providers.

1. Apriva: One of the most extensive mobile payment solutions in the market is the new Apriva Wallet, released on Jan. 10 and available as a white-label solution for retailers. It works on iPhones and Android devices and is “infrastructure-agnostic,” meaning it can operate with any payment processor, financial institution, and wireless carrier. It also works with current magnetic stripe payment technologies, NFC, and Eurocard-MasterCard-Visa (EMV) standards. The app can be used for POS transactions, loyalty programs for customers and merchants, coupons, ticket purchases, and storage of driver licenses, ID cards, health care information, passports, and other cards that a consumer would normally carry in a physical wallet. 

2. PayPal: Reports in November revealed that the eBay-owned pioneer in online payments is testing PayPal Wallet for POS mobile payments, and the blog TechCrunch reports that users also will have the ability to access real-time store inventory and receive in-store offers and real-time location-based advertising from stores. The website Business Insider tested the app and writes that users will be able to store credit cards, gift cards, frequent-flier miles, and more in one location. The full program will likely be unveiled later this year.

3. Google Wallet: The search and advertising giant Google released its Google Wallet application in Sept. 2011, and about 140,000 U.S. merchants are equipped for Google Wallet payments, including Macy’s, the Container Store, Jamba Juice, CVS/pharmacy, Gap, Toys“R”Us, and Peets Coffee & Tea. The service currently is compatible only with the Google Nexus S 4G phone, available through Sprint, and works with Citibank MasterCards, so usage is limited, though the company plans to add more phones and credit card partners in 2012. Users can store credit, loyalty, and gift cards as well as redeem sales promotions through their mobile phones. 

4. Isis: AT&T, T-Mobile, and Verizon have partnered to create this mobile commerce system that's set to debut later this year. The Isis website says it will eliminate the need to carry cash, credit and debit cards, reward cards, coupons, tickets, and transit passes. The new network will be participating at the Small Card Alliance’s Payments Summit Feb. 8-10 in Salt Lake City.

5. Swagg: Swagg launched mobile gift cards and promotions in early 2010. It’s not a true virtual wallet, as the app operates like an open-loop card and facilitates purchases through Swagg gift cards only and not with credit or debit cards. Users, however, can store any of their reward, loyalty, membership and gift cards into the app. Cabela’s began accepting Swagg mobile cards in October 2011. Other national merchants in the incentive space that accept Swagg payments include Gap, Omaha Steaks, Brookstone,, and American Apparel.