Proliferation of Mobile Wallets Continues

Navigator Edition: June/July 2016
By: Jeff Crawford and David Cencula

Over the past month we have observed a number of important mobile wallet developments. Announcements from Wells Fargo, Visa and Apple have highlighted the growing competition among FIs, merchants and third-party service providers. Despite these launches another major player, MCX, put its product on indefinite hold. These events place increasing pressure on issuers to expand their mobile wallet strategies beyond the integration of third-party services such as Apple Pay and Android Pay.

Wells Fargo Integrates Payments and Banking

On May 24th, Wells Fargo unveiled its plan to release the Wells Fargo Wallet for Android by mid-to-late 2016, making it the second-largest bank (behind Chase) to introduce a proprietary mobile wallet solution. The wallet will be embedded into its existing mobile banking app, a new development in the market that will provide an integrated banking and payments experience. The app will enable instant provisioning of cards and real-time checking account and credit card balance checks. Wells noted that future versions of the wallet will include on/off card controls, cardless ATM access and integration of credit card rewards programs.

Visa Introduces White-Label Wallet

The week following the Wells Fargo announcement, Visa publicized the rollout of its white-label wallet for FIs, the Visa Digital Commerce App. The offering will enable FIs of all sizes to offer a proprietary-branded mobile wallet to its customers. The product is in various stages of implementation at 30+ FIs. Unlike the Wells Fargo wallet, the Visa app will be separate from mobile banking. The wallet will support credit, debit and prepaid cards, and all transactions will be tokenized.

Other Mobile Wallet Announcements

Apple recently announced that it will be expanding Apple Pay to desktop and mobile-based browser purchases. Once payment information is provisioned into Apple Pay, users will be able to select the Apple Pay logo at checkout and authenticate the transaction using TouchID on their mobile device. The feature will be restricted to Appleā€™s Safari web browser operating on the updated Mac OS. The service will allow Apple Pay to compete directly with PayPal, Visa Checkout and MasterPass.

Meanwhile, the Merchant Customer Exchange (MCX) informed participants in its CurrentC pilot that the program would be terminated by the end of June 2016, with no planned national launch. Once seen as a rising threat to Apple Pay, several of its merchant members (notably, Walmart) have introduced proprietary payment solutions. The termination of CurrentC does not, however, represent the end for merchant wallet offerings. On the contrary, we expect to see a proliferation of merchant wallets. In addition to Walmart Pay and the rumored Target Pay, Chick-Fil-A recently released a mobile wallet with an integrated loyalty program.

Figure 1: Mobile Wallet Announcements

Fig-1-_Mobile-Wallet-AnnouncementsSource: Public announcements and First Annapolis Consulting research.

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Mobile is a primary focus of investment in the payments industry, spanning key topics such as product usage, customer engagement, fraud prevention and loyalty. Financial institutions have a unique opportunity to differentiate themselves from the competition by integrating their mobile banking and payment features into a single, unified wallet, as demonstrated by Wells Fargo. There are an increasing number of options available for banks looking to offer a branded solution, including in-house development, developer partnerships, or white-label offerings from third-party providers. These options have trade-offs in terms of flexibility, control, time to market and required investment. Regardless of the preferred approach, the message is clear: banks must develop and execute a mobile wallet strategy today to stay relevant and competitive.

For more information, please contact Jeff Crawford, Senior Manager,; or David Cencula, Senior Analyst, Both specialize in Payments Strategy and Innovation.

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