In the not so distant past, cash and checks were the primary instruments of payment. Today, these have largely been replaced by cards. According to data from the Federal Reserve, as of 2012, there were approximately 73.2 billion transactions with debit and credit cards while there were only a quarter as many transactions with checks. Though cards existed in some form or the other since the early 20th century, it was only after 1950 that they were adopted on a widespread basis. With mobile wallets, we’re possibly at the beginning of another change. Mobile wallets are applications designed to enable consumers to pay using their phones either by setting up their cards in the application or by adding a balance to them. So far, the value proposition is centered on simplicity, convenience and security. But, response from consumers has not been encouraging.

Before modern credit cards, people used to maintain multiple cards for buying products and services from different merchants, and borrow small amounts from banks to finance similar purchases. Clearly cumbersome for consumers, the store-specific cards were problematic for merchants as well, as they added employees to manage the task of ensuring timely repayment. Through a process of trial and error, cards that served both as a payment instrument as well as a source of revolving credit were introduced into the market. Initially, without information technology, these cards introduced additional steps in the payment process as store clerks had to call the bank to confirm the identity of the customer before accepting payment. Nonetheless, they were adopted, as they addressed a pain point for both consumers and merchants. There was a Job-to-be-Done (JTBD) that was intimately associated both with loyalty programs and buying on credit.

Let’s consider another example from the past. For a long time, the only way people could enjoy music was by going to a concert or creating their own. Then RCA introduced Victor, a radio-phonograph based on Edison’s phonograph that enabled music to be recorded and replayed. But it was not used to replace the musician in concerts. One can imagine the reaction of people if such an idea were put into practice. Instead, the Victor was used to bring music where there was no musician. The JTBD was “help people enjoy music at home.” There was no job at the concert that could be addressed by the phonograph.

There is a lesson to be learned from the two examples above. It’s well known that people adopt an innovation if it solves a problem for them. But what is not always apparent is that the problem may not be directly associated with an existing way of life. Thus trying to replace this way of life with the innovation can be a futile effort. With mobile wallets, we are confronted with such a situation. As long as the process of making payments remains the same, they do not solve any problem for most consumers. Instead, people are being asked to replace a single step in the entire process. So how can success be achieved? The answer, quite possibly, is to address a JTBD instead of merely attempting to replace the step of swiping the card. Here are a couple of examples.


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Circumstance #1: Retail checkout. Whether you’re purchasing two or twenty items, you’ll likely face a queue. And unless there are zero shoppers ahead of you, this leads to increased waiting time for a process that’s got nothing to do with the shopping experience. You do not go to a store to pay – you go there to get what you need. Taking out the card, checking the amount to be paid and swiping the card are steps that are necessary to gain ownership. But when you pay online with a single click, it does not change your ownership of the thing that you bought despite the fact that you do not take out your card and swipe it. Rather it reduces a step in the purchasing process.   It’s not that retailers are unaware of these challenges—many, like Kroger’s grocery store, have put significant effort and investment into easing the checkout process. While the existing system of checkout is unlikely to go away, perhaps there’s an opportunity for not only easing but removing the checkout process altogether for certain types of purchases. And that is where mobile wallets should be positioned.

Job: Get me in and out of here as quickly as possible. We know how it feels when we are in a hurry but have to stand in queue at the store with only a couple of items in the shopping basket. What if it were possible to “self-pay” using a mobile wallet and just walk out of the store? Think about a restaurant where after completing a meal, you wait for the check to arrive and the card to be swiped. A mobile wallet could eliminate the wait time at the end of a meal and also help restaurants optimize turnover during busy hours. OpenTable is attempting to do this with their mobile application. But integrating the functionality into a single application is likely to be a better solution. Asking customers to download a separate app for every possible payment opportunity is like reinstating the store-specific credit card of yesteryear. Surely we can do better.

Circumstance #2: Employee expense management. People who frequently travel for business are often confronted with the hassle of managing expense reports. Admittedly, the process today is much more streamlined than it used to be. But even with mobile-based solutions to help manage paper receipts and track expenses, the experience is incomplete at best. People collect a paper receipt at dinner, an e-receipt from the hotel, and no receipt from the tollbooth or taxi tip, and then go about snapping photos and taking screenshots to complete a pieced-together Frankenstein of an expense report.

Job: Help me easily and accurately track and submit expenses. Now, imagine creating an expense report from within a mobile wallet application. Let’s say that you are on a two day business trip to New York. Every time you pay using your phone, it captures the receipts or the information about the purchase. On the way back to the airport when you have a few minutes to spare, with a few clicks you can create and submit the expense report. No need to wait for expense line items to show up on your card account or to fumble around with receipts. And there is no need to set reminders to complete the task, or to deal with a list of pending expense reports. Talk about easy. Despite the features offered by existing expense reporting applications, clearly a case can be made to move the functionality to the one that is used for making payments.

If mobile wallets are used merely to replace leather ones, not only will adoption likely be slow, it will be an unfortunate waste of good technology. Just because an innovation  in making payments is available, it does not mean that people are going to use it. The key may be to solve for those important JTBDs that are not directly associated with making payments.


  • Subhajit Das
    Subhajit Das