Mandatory M-Wallets

Mar 15, 2001 12:00 PM, Nikki Swartz, Assistant Data Editor

But soon, you’ll probably trade your leather wallet for a digital or electronic one in your cellular phone, and all of your important data will be stored in wireless carriers’ networks.

Jim Balsillie, Research In Motion (RIM) chairman (www.rim.net), said wireless wallets could eliminate conventional identity documents and plastic credit cards, and give consumers round-the-clock access to a virtual cash machine.

“Mobile wallets are much like physical wallets,” said Mitch Bishop, Mobileum (www.mobileum.com) vice president of corporate marketing. “When people talk about m-wallets, sometimes they get caught up on the idea of commerce, the transactions of buying and selling. That’s certainly one use of the m-wallet capability.”

But Bishop said m-wallets can provide myriad services for consumers and carriers, including storing consumer information such as passports, health-care or insurance data.

For carriers, m-wallets also will be an important component of m-commerce. They will allow consumers to shop wirelessly, securely and quickly with their wireless phones.

M-wallets also entice users to visit carriers’ Web sites and will reduce churn considerably because once you hold users’ wallets, it will be much more difficult for them to churn.

There are wallet systems out there today that are separate devices, based on Bluetooth, WAP and smart cards. For example, Ericsson’s wireless-wallet concept combines a Bluetooth connection, WAP and smart-card technologies in one pocket-size wallet, which can hold several cards and connect them to the Internet through a wireless phone (www.ericsson.com).

But most consumers don’t want another device to clip on their already-crowded belts or to lose in their purses. And what if you lose your wallet device?

The best bet for consumers and carriers is a server-side wallet solution. Server-side m-wallets are network-based and don’t require smart cards or separate devices. Server-side platforms, such as Mobileum’s SmartWallet, put more functionality on the server and less on the device or the merchant’s site. They enable more security (form fill-in can be done in XML and sent to a requesting site), user friendliness (m-wallets can be managed via a desktop interface) and extensibility (the technology behind the platform allows for more than transactions).

Another advantage to a server-side approach is that the user manages the storage, delivery and details of the information. With SmartWallet, for example, users can manage their data, turn cookies on or off and populate multiple sites without having to re-key everything.

SmartWallet stores credit-card, shipping, billing and other information the user controls, securely on the network; neither the device nor the merchant retains the information. These preferences are formulated, stored and, through a secure XML engine, sent to the various e-businesses on request.

For example, a consumer is browsing various sites on his wireless phone and decides to purchase a CD at Amazon.com. Then he goes to Moviefone.com and buys some movie tickets. His m-wallet information is transparently passed from site-to-site, and all he has to do is type in his ID and password.

The wallet can be presented in multiple formats including HTML, WML and XML; new information can be added or integrated; and multiple domains can access information securely.

Mobileum’s SmartProfile capability enables users to turn on or off the wallet information on a site-by-site basis securely, using Java- and network-based security protocols. So you could turn on your wallet information when you shop at Barnes & Noble.com, and turn it off when you shop Amazon.com.

Another m-wallet application is using a user’s phone number to trigger an electronic wallet somewhere at the backend, maybe hosted by his bank. He could instruct the wallet to disclose the information from his phone to the merchant.

Prepaid Money

This model also could be used by prepaid customers, who could use prepaid money to buy things other than minutes. For instance, if a teenager wants to buy an MP3 for $1.50 but doesn’t have a credit card, he could key in his cellular phone number instead.

“That number can represent money because he’s been pre-paying his cell- phone bill, and he has money left in that subscription,” Peyret said. “The payment doesn’t actually flow through the phone, and the phone is not necessarily used to shop but is used almost like an authentication device, something that’s unique to you.”

Someone has to populate or enter the information that goes into a wallet, whether shipping, billing address or login ID and password. M-wallets must be populated or else users have to re-enter information every time they want to use them for purchases. When it takes several keypad punches just to enter your name, this isn’t a fun exercise.

According to Bishop, carriers should look for m-wallet systems that allow subscribers to populate their wallets easily, quickly and from any device. Mobileum’s system allows users to enter information from any device and through a PC.

“The whole idea of mobile wallets is to make it easier for people to use wireless devices,” he said. “The biggest advantage of a server-side mobile wallet is that you can type in the information once and publish it to hundreds of places. The advantage to a carrier would be that instead of having My Amazon, My Barnes & Noble and all these different places where personalization information is kept, you have it in one place, a server that can serve that information up to multiple commerce sites simultaneously.”

Snaz Commerce Solutions’ server-side m-wallet enables another important benefit for consumers — 1-click purchasing (www.snaz.com). The wallet holds consumer information including user data, payment habits and purchase history and preferences, in addition to user name, PIN, multiple credit-card details, and multiple billing and shipping information. Once the user executes the m-wallet, he can choose the credit card he wants to use and the shipping address.

“The reason server-side wallets are more popular is because you want to make it device agnostic, but the question is where are you going to keep the wallet information?” said Vikram Chachra, Snaz chief strategy officer and co-founder. “Carriers would like to keep user information very close. From a technology perspective, the ASP model is not going to be successful; you have to collocate that information for that server within the carrier’s WAP phone.”

According to Chachra, carriers need a wallet built for them as a database structure so they can keep subscribers’ information themselves. Obviously, carriers want to keep subscriber information so they can reassure them that their important data is secure. Consumers are less likely to use wireless devices for transactions if they feel it’s not safe to do so.

M-Wallet Value-Add

Most carriers, analysts and vendors think that m-wallets will be more successful than Internet-based, electronic wallets have been. Carriers had better hope so — m-wallets are integral to m-commerce.

“Wallets in the Internet space haven’t succeeded because they’re a mere convenience to save you from typing in your credit card again and again,” said Patrice Peyret, MobileWay CEO (www.mobileway.com). “In the mobile space, you are not going to type in your number and billing information with the keypad of your phone. Being able to trigger a wallet is indispensable.”

Chachra agreed. “The e-wallet concept on the Web was not very compelling because the key proposition it had was eliminating form filling. It’s not that hard to fill out a form when you have a large keyboard. But when you take the concept and expect people to put in the same effort to make a transaction on a wireless device, there are some significant barriers.”

Bishop said m-wallets will be more powerful and accepted than e-wallets were.

“A server-based approach is really the difference between e-wallets and m-wallets,” he explained. “In the mobile case, the cookies are stored on our server and turned off and on by the user.”

AT&T Wireless’ (www.attws.com) network-based m-wallet, powered by Qpass (www.qpass.com), enables users to make secure and simple purchases from a variety of merchants by securely storing, managing and transferring payment information for use during wireless or wired transactions. The wallet allows AT&T Digital PocketNet and AT&T WorldNet customers to buy from participating sites and eliminates the need to enter personal or credit-card information with each transaction or at each site.

Qpass securely manages every subscriber’s personal and payment-related information, delivers the relevant information directly into the merchant’s order-processing system, and captures and stores a digital receipt for subscribers.

“The actual data will reside in boxes that sit at Qpass’ premise, some of it but not all of it” explained Andy Willett, AT&T Wireless vice president of business development. “Our relationship is such that that data is data that we have complete ownership and control of so Qpass isn’t able to go market that information. Our single most important priority is to make sure that we protect the interest and maintain the trust of our customers.”

To further ensure subscribers’ safety, Peyret suggested integrating SMS notification with wallet systems. Carriers could send a short message to users through their phones before a payment transaction takes place, asking them if they agree with the impending transaction. For example, a user’s phone would buzz and ask via SMS whether the user wants to go ahead and buy an MP3 from this site for $1.50. If the answer is yes, the user would simply enter his or her PIN code.

“Wallet functionality that makes the transactions from the device easy is going to be critically important,” Willett said. “The devices are going to get better, that’s a given. (That) will enhance the experience and make the transactions much easier to drive. But the specific things in m-commerce that we need to stay focused on and work hard on is this notion of wallet.”

Bishop said server-side m-wallets will be another important value-add for carriers.

“Every one of these capabilities that carriers add makes the argument to go wireless that much more compelling,” he said.