The prepaid mobile wallet: A powerful product for an impatient ecosystem

Abstract

This paper analyses the intersection of prepaid commerce and the mobile wallet, in order to present strategic options for banks seeking to respond to what Mobey Forum contends is an emerging threat to their positions in the mobile wallet ecosystem. It provides an overview of the various market developments and growth sectors in prepaid services, together with a description of prepaid’s differentiating characteristics, before exploring how their competitive attributes and advantages over traditional banking services are congruent with the key drivers of mass market mobile wallet adoption. It contends that new, innovative prepaid service models and ‘second generation’ mobile wallet solutions are mutually supportive and, when combined, they will each drive innovation in the other, pushing traditional banks further down the mobile value chain as a result, and forcing them to yield both market share and visibility with their mobile customers. The paper acknowledges that, for now, prepaid may be a ‘better fit’ for the mobile wallet than traditional banking alternatives. In order to explore the prevailing options for banks, the paper then cites examples of how innovative banks have responded to this emerging market. These options include developing a proprietary prepaid infrastructure for active and open use with customers, using a prepaid infrastructure ‘behind the scenes’ in order to support new services such as peer to peer money transfers, providing back-end infrastructure support to the new prepaid service providers, and establishing an agent network enabling the bank to resell the prepaid digital products of popular merchants. The paper concludes that banks now need to recognise prepaid as a major driving force in the future of mobile wallets and accept that influential stakeholders in the mobile wallet development ecosystem are now using prepaid as a means of accelerating mobile wallet development and deployment.