I had a chance conversation with one of my neighbors recently where one of them casually mentioned that they have never bought anything online. Ever. That gave both my wife and I some pause. Not that we are big shoppers, on or offline: but we both think of online shopping as a natural extension of what we do, like breathing. We even know people who buy furniture online, which I think a bit risky.
Against this backdrop, there are yet another round of eWallet innovations that are destined to make the mistakes of the past. There are multiple solutions, usually involving your smartphone and a payment provider, such as the recent announcement from Visa and Samsung. Then there was the deal between Starbucks and Square so you could pay for your lattes by tapping your phone near the register at checkout.
A lot of this activity is motivated by having more near field communications on our phones, meaning we don’t need physical contact to conduct a transaction. While that is very sci-fi, it isn’t going to motivate people like my neighbor to start conducting ecommerce. Let’s go to the video tape of the past botched plays.
I dredged up an op/ed piece that I wrote 14 years ago for Computerworld where I concluded, “If you have a Web storefront, steer clear of e-wallets for now. Let your customers pay you as easily and as quickly as possible.” That advice still holds true today.
To set the context for this piece, you need to know that Microsoft had its eWallet software as part of Windows 98, and during the latter part of the 1990s there were probably a dozen or so vendors who were developing Internet payment schemes of one sort or another. Only Paypal survives from this era, and ironically they had their origins as a piece of software that was used on Palm Pilots to beam payment information using their built-in infrared technology. Many of us consider the contact manager on the Palm still better than anything we have today, but that is a fight that I will leave for another day.
So what happened to all those payment companies? They made several mistakes.
First was the chicken-and-egg of non-universal coverage and too many “standards.” I wrote back then: “Imagine going shopping at a physical mall store and getting ready to pay, only to find out that the store accepts one obscure credit card issued by a single bank in Tuvalu. How long do you think that store would stay in business?” Exactly. All these vendors need to get around one solution, and do it quickly. Imagine how long credit cards would have lasted if you needed separate machines to scan your Visa, Mastercard, and Amex at the checkout line.
Second is that credit/debit cards just work too well. We all have them, we all carry them with us at all times, and we all know how to shop with them. Trying to compete with this universal solution is madness. Indeed, they have largely replaced the need for actual cash. I remember when my dad wouldn’t leave home without several hundred dollars in his wallet. Even when I travel, I rarely have more than $20 or $40 in mine, and usually a lot less. Everyone takes plastic nowadays.
Next, I don’t want to manage yet another cache of cash. It is bad enough that Paypal exists, and that I have to track what is in my account and how quickly I can get any dollars in or out of it when I am buying or selling something. Why do I need yet another account to manage?
The last straw is that I usually need a specific piece of software, browser version, or phone. Check out what you need for the Google Wallet: “an NFC enabled Android device with a Secure Element chip running the most recent Android operating system.” That isn’t a very long list of phones, none of which I currently own. We tried this before and the number of variations means that almost always you don’t have the right mix of things to access your eWallet some of the time. See my remark about Tuvalu above. And note the roll call of failed Internet payments companies of the past too.
So our phones may have gotten smarter with all sorts of new protocols and wireless radios, but ultimately the real gating factor in having the carbon life forms suffer through using them, same today as back in 1999. It is not too late to learn from the past.And maybe sometime soon my neighbor will feel confident enough to buy something online.