Mobile Money: It’s back to the future

Last week the WSJ disclosed Apple’s plans to launch a “wireless wallet” on the iPhone. This isn’t a new idea but should Apple succeed they’ll probably be credited with inventing it.

Mobile money was cutting edge research in 2001. In 2007 when I got the opportunity to work on the technology, Sony’s FeliCa wireless wallet was probably the world leader. By then I realised there was considerable difference between being able to accomplish something technologically and mass-market adoption. In this particular case, fragmented regulation restricts international market adoption. The mobile wallet still isn’t mass market and there’s no word on how Apple plans to deal with regulation.

Since my early days in mobile, I imagined that consumer banking was a natural move for network operators. They have the infrastructure, consumer reach and financial muscle to capitalise on mobile money. Recently T-Mobile announced plans to become a bank, following Sprint who announced something similar back in May 2013. Is this how the market will evolve? Will network operators become banks, managing regional regulatory issues, with Apple and Google as the facilitators? T-Mobile is certainly very serious and plans to leverage their physical retail network to beat off purely online competitors. Obviously there is the existing relationships Google/Apple and network operators, but more importantly operators desperately need to replace the revenue streams lost to OTT services such as WhatsApp.

In 2001 the time the best definition I found said (e-) money is a token with value that is non-replicatable but transferable. I guess Bitcoin currently ticks all those boxes. The other criteria are market and regulatory acceptance.

The original wireless wallet is a transaction enabler and not a virtual currency. I imagine that mass adoption of wireless wallet technology will lower the barrier for virtual currencies. The line between wireless wallet and virtual money is already beginning to blur with the hundreds of Bitcoin related mobile apps often providing similar functionality as a wireless wallet.

Consumer banking markets are ready for a shake-up. It takes financial muscle to move in banking markets but Bitcoin has shown that ingenuity can have an impact in banking just as it can have an impact on every other area of economic activity.

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  1. The problem with NFC is that wireless carriers won’t support any solution other than their own , and a single standard hasn’t risen to prominence. So digital wallet companies weren’t able to persuade consumers that taking your phone out of your front pocket to make a payment was more convenient than taking your wallet out of your back pocket.