Whitepaper - The Evolution of Digital and Mobile Wallets The Evolution of Digital and Mobile Wallets | Page 4
The Evolution of Digital and Mobile Wallets
August 2016
transition into a device for POS usage is complicated by a lack of accepting terminals, conflicting
protocols, and limited distribution of payment-enabled phones. All of these factors are changing
quickly, however, and the growth rate for physical-world payments is increasing.
In Europe, for example, the acceptance and usage of contactless card payments has quickly
accelerated. Visa reported in May 2016 that one in five in-person Visa-processed card payments
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is now contactless. MasterCard and Visa have set compliance dates for all POS terminals to
accept contactless payments by January 2020 at the latest. Mobile proximity payments use the
same standards as contactless cards, using the near-field communication (NFC) and EMV
standards. As two in three phones will be NFC-enabled by 2018, this means that acceptance for
mobile proximity payments will become ubiquitous in the near future.
D E F IN IN G T H E D IG I TA L WA L L E T
The digital wallet is the engine of mobile commerce. Without a digital wallet, consumers need to
enter a wealth of information into a form constrained by the smartphone’s screen size. While the
mobile wallet space for in-store payments has only emerged with the launch of Apple Pay in the
autumn of 2014 (soon followed by Google’s Android Pay and Samsung Pay), the concept of a
digital wallet has been in-market since the early days of online commerce.
PayPal created a digital wallet to support the first major online marketplace, eBay. While PayPal
attempted to broaden the offering’s appeal outside of eBay for several years, the concept of
storing payment information with an online provider to enable purchases outside of eBay
initially didn’t catch on. Amazon 1-Click emerged in 2006, raising the bar in terms of user
experience (UX) and expanding merchant and customer vision of the digital wallet’s capabilities.
Since then, other digital and mobile wallets have emerged, and there is now a variety of
different approaches to online and mobile proximity payments, all falling under the general
description of “digital wallet.”
A digital wallet is a software application with the following base functionality:
It offers secure enrollment of the user (application download, identity check) and
secure provisioning of credentials (e.g., user ID and password for wallet access).
It offers the ability for the user to securely provision and store customer-identity
information (e.g., email address), payment information (e.g., credit card data), and
shipping address details. The user can preselect a payment method within the wallet
application to execute commerce transactions (i.e., pay merchants online, in-app, or
in-store).
The funding of the wallet payment may come from a debit or credit card, prepaid
card, bank account, e-money account, virtual currency, or any other store of value.
3. “Europeans ‘Touched To Pay’ Three Billion Times In The Last 12 Months,” Visa Europe, accessed 11
May, 2016,
https://www.visaeurope.com/newsroom/news/european_used_contactless_3_billion_times_last_yea
r.
© 2016 Mahindra Comviva. All rights reserved. Reproduction of this report by any means is strictly prohibited.
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