On November 16, 2010, T-Mobile, Verizon, and AT&T formed ISIS (Softcard), in order to enter the mobile wallet space, initiating the mobile wallet war. Google had its wallet, banks were building their own, and many tier one merchants had no interest in paying or sharing their data with the mobile carriers or Google. Then ApplePay came along and everyone said ApplePay had figured it out and would win the war. The problem with mobile wallets is that the war was initially fought by firms trying to fix a problem that did not exist and not knowing what they were really fighting for, payment integrated marketing.
As of July 2016 all of the mobile wallets lost the war. After BILLIONS of dollars spent (Soft Card ~ $800MM, Google Wallet $1 billion+…) and little consumer or merchant adoption,
- Google Wallet initially stumbled because the carriers would not let Google Wallet get on their phones to compete with the carriers’ Softcard solution;
- Softcard failed and ended up selling its assets to Google;
- MCX laid off half its force (~40 people) and pivoted, letting much bigger and richer players battle for the consumer, and letting each retailer pursue its own wallet solution; and
- Apple has made little traction with consumers.
Why did mobile wallets fail? One reason is mobile wallets are not easy. Consumers have to:
- Set up a payment card in the mobile wallet;
- Learn a new behavior (pay with phone instead of card); and
- Make sure the merchant location accepts mobile payments
Right there, with those seemingly simple steps, the mobile wallet lost 99% of consumers. Mobile wallets failed because payments is NOT broken for consumers. Payments may be terrible for retailers because of the fees, but consumers are covered with their ubiquitous plastic that works everywhere and is easy to use.
But why were these battlers fighting with mobile wallets in the first place? These firms focused on the vessel, and not what was in the vessel. Payment integrated marketing, offers and loyalty tied to the customer’s payment method, is what matters. But payment integrated marketing will not work if only 1% of consumers have access to it. But there is a solution, and it exists today. The Holy Grail (vessel) capable of powering payment integrated marketing is the ubiquitous plastic that works everywhere and is easy to use; the customer’s own credit card.
Part 2. Why Card Linking is the Holy Grail.
Jeff Mankoff 
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