Despite the best efforts of titans like Visa Inc (NYSE:V), Google Inc (NASDAQ:GOOG), and communication giants like AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ), the much-heralded takeover of the payments space by the mobile wallet is no closer to reality.
Why haven’t consumers jumped on the mobile wallet bandwagon? My research has convinced me that there are three big barriers to widespread adoption of the technology, and that all of them will have to be overcome if the virtual payment system is to be widely embraced.
1. Security fears
Consumers are very concerned about the security of using mobile wallets, and a survey of 1,500 respondents earlier this year shows just how important this issue has become.
A full 70% of those polled said that identity theft is their major worry when it comes to using virtual wallets, followed closely by 60% that feared the theft of their smartphone would result in others having access to their information. Nearly half felt that nothing short of absolute protection against theft and fraud would entice them to use a mobile wallet as a payment option.
This is a reasonable concern. For example, Isis, a mobile wallet offering from T-Mobile, AT&T Inc. (NYSE:T), and Verizon Wireless, uses a removable SIM card to store a customer’s information. Recently, a German security firm has identified SIM cards as being vulnerable to hackers — who could conceivably lift information from a consumer’s phone by prompting the device to respond to a spam message.
2. Options are too limited and confusing
Currently, the mobile wallet space has a mish-mash of players and offerings, one of which is not even available for general use. Google Wallet, which works only with Android phones, has only one carrier, Sprint Nextel Corporation (NYSE:S) that supports its app; not surprisingly, the trio behind Isis block it altogether. Even Sprint Nextel Corporation (NYSE:S) is giving Google Inc (NASDAQ:GOOG) a hard time, and now offers its own version of a mobile wallet to compete with Google Inc (NASDAQ:GOOG)’s product.
Isis, meanwhile, has been in a testing phase since last October and is currently only offered in Austin and Salt Lake City. The backers of the technology have only recently been making noises about a nationwide Isis debut this year, but no date has been set.