Visa has ratcheted up the competition level in the European mobile wallet market—and will likely do so in North America before the year’s end. The company just announced that V.me, its in-house mobile wallet solution catering to both consumers and merchants, will launch in parts of Western Europe by Fall 2012. A rollout in the US and Canada is expected to follow shortly thereafter.
With a number of mobile wallet initiatives already underway in this region, including Google Wallet, O2 Wallet and the proposed Project Oscar (a European equivalent of the ISIS joint venture in the US; currently under evaluation by European anti-trust regulators) the mobile wallet competitive landscape in Europe was already fairly crowded prior to this announcement, considering the relatively low level of consumer NFC adoption in the region. Despite the small population of NFC-using consumers, companies like Google, Vodafone, T-Mobile and Orange have been keen to invest in mobile wallet initiatives.
Due to the present lack of consumers using NFC, any early-mover advantage established by pioneering mobile wallet providers like Google in respect to market share and consumer adoption is relatively inconsequential at this point in time. Although Google Wallet may presently lead the market, it is not necessarily the clear favorite in the future. Only time will tell which (if any) mobile wallet consumers prefer, but the answer will not be certain until NFC use reaches critical mass worldwide.
Until the time when the consumer user population grows to the point where a leading mobile wallet player emerges, VDC believes a key determinant of a mobile wallet provider’s future success will be the willingness of merchants to use that particular provider’s solution—after all, without anywhere to use a mobile wallet, what value does it provide for a consumer? Therefore, without broad merchant acceptance, a mobile wallet provider will struggle to convince consumers to use its solution. A similar “chicken and egg” type of problem hamstrung early contactless payment card deployments such as MasterCard’s Paypass and Visa’s payWave. Visa’s opportunity to drive mobile wallet adoption via V.me—both at the merchant and consumer level—is a key aspect of this announcement’s significance.
VDC believes Visa’s entry into the mobile wallet market will ultimately prove to be a watershed moment in the evolution of mobile commerce and contactless payment. As the world’s leading credit card company, Visa has tremendous clout with banks/card issuers, merchants and card holders alike. By virtue of its entrenchment in all aforementioned segments of the worldwide payment ecosystem, Visa has unparalleled ability to influence the future of payment technology.
If V.me can effectively leverage the power of its parent company, we think it will vastly increase awareness and adoption of contactless payment across all of the aforementioned payment stakeholder categories, especially considering this mobile wallet works with all card brands—not just Visa. With NFC and mobile wallets, merchant participation is critical, but consumers still hold the ultimate veto power. However, if V.me delivers the convenience, ubiquity and value needed to spur consumer adoption, we think it has the opportunity to bring mobile wallets to the mainstream more successfully than any of its predecessors.