Detailed Guide to Mobile Payments: Digital Wallets

The U.S. card-based payments market is expected to process approximately $2.7 trillion in transactions in 2015, a staggering figure that is driving a surge in mobile-centric innovation. For fintech professionals, the rapid diversification of payment modalities—ranging from NFC-enabled smartphones to smart plastic cards—requires a strategic re-evaluation of how financial institutions engage with the digital wallet.

What was announced

Deva Annamalai, Director of Innovation and Insights at Fiserv, has released a two-part analysis examining the primary mobile wallet players and emerging card-based payment devices. The report evaluates these technologies from an adoption perspective to help banks and credit unions identify potential benefits from the current wave of disruption. The analysis categorizes the landscape into two distinct groups based on how they function at the point of sale.

The first group consists of mobile wallet solutions where the smartphone serves as the primary payment tool. These include:

• Apple Pay and Passbook: Utilizing Near Field Communication (NFC) technology.
• Android Pay and Google Wallet: Leveraging NFC and Host Card Emulation (HCE).
• Samsung Pay: Utilizing Magnetic Secure Transmission (MST) technology acquired through LoopPay.
• MCX / CurrentC / Paydiant Wallet: A merchant-led mobile initiative.
• PayPal Wallet: An established digital payment solution transitioning to the physical point of sale.

The second group identified in the analysis involves standalone plastic devices that use a mobile phone as a supporting accessory. This category includes the Coin Card, Plastc Card, Swyp Card, and Stratos Card. These devices aim to consolidate multiple traditional cards into a single physical form factor, representing a bridge between legacy plastic and fully digital mobile wallets.

The companies involved

Fiserv is the entity behind this market analysis, with insights led by Deva Annamalai. The report highlights a competitive landscape currently being reshaped by Silicon Valley giants and specialized startups. Apple is noted for its recent first foray into the payments sector, while Google is recognized for rebooting its existing payment initiatives to better compete in the mobile ecosystem. Samsung’s entry into the market is specifically tied to its integration of LoopPay, a move that allows its devices to communicate with traditional magnetic stripe readers via MST technology.

The analysis also references the Merchant Customer Exchange (MCX), a consortium of retailers developing the CurrentC wallet using technology from Paydiant. On the hardware side, the market features a group of emerging startups—including Coin, Plastc, Swyp, and Stratos—that are attempting to disrupt the status quo by evolving the physical card itself. These companies are vying for a share of a mainstream payments landscape that has seen more technological change in the last five years than in previous decades combined.

What this means

The $2.7 trillion valuation of the U.S. card market explains the current intensity of the "wallet wars," but the fragmentation of technology standards remains a significant hurdle for universal adoption. While NFC is the preferred standard for Apple and Google, Samsung’s MST approach addresses the immediate reality of legacy merchant hardware, creating a split in how consumers interact with terminals. This fragmentation puts pressure on banks and credit unions to support multiple, competing standards simultaneously to avoid being sidelined. The ultimate challenge for the sector is no longer just technical capability, but achieving the ubiquity necessary to finally displace the traditional physical wallet.