It’s all about the money, well digital wallet actually

It is amazing to think that my son will have as hazy memories of cash as I do of ‘old money’, if the latest research from Paypal proves to be true.  In the same way I can only really remember sixpences from the tooth fairy, by 2016 there will be no need for cash, credit cards or cheques on the high street. Paypal estimates that £2.5bn will go through as mobile retail payments in the UK that year and that will be just the beginning.

What is not quite so clear is whose digital wallet I will have in my pocket.  Visa is the latest brand to come out punching with V.me – love the name – being launched a fortnight ago.  Also out there fighting are other big financial players like American Express with Serve, MasterCard with its multiple collaborations strategy, the ‘disrupters’ such as Google (‘Google Wallet’), PayPal and Carphone Warehouse (Mobile Money Network) plus others perhaps yet to show their full hand (Amazon or Apple anyone?).  There are also some interesting innovating start ups in the US to keep an eye out for: Square and Dwolla to name just two.

The individual mobile operators are trialling showcase projects with RIM/Telefonica announcing just last week a test project in Spain.  But perhaps the more interesting news is that back in June major UK operators  – Everything Everywhere, O2 and Vodafone – announced a joint venture (JV) to ‘bring together expertise and technology ’.  The JV already needs to fight off an anti-trust complaint from 3.  If this takes off, and means common standards, then this is good news all round.  But if the intention is to deliver another rival system, we have a serious contender to add to the mêlée.

Whichever way this one goes, there is a titanic battle ahead.  One thing you will quite quickly see is more partnerships as the above and more jostle for position.  Who wins the fight for your virtual wallet will partly be based on relationships with retail (retailers simply can’t support them all) and partly on who wins the hearts and minds of the lovely digital generations.  Making the service easy and perhaps more importantly, given the intention is for them all to be easy, delivering excellent digital customer service is going to be vital.  Not something the finance industries are traditionally noted for.

At this stage there is all to play for.  Watch this space.