Mobile Wallets Hit $500 Million In 2012, But That's Mostly Starbucks

Mobile wallets did half a billion dollars' worth of in-store transactions in 2012 in North America, but that's not exactly a rousing endorsement of PayPal (NASDAQ:EBAY), Google Wallet (NASDAQ:GOOG), Isis or their ilk—Starbucks (NASDAQ:SBUX) was responsible for "the vast majority" of that $500 million, according to Swedish analyst firm Berg Insight.

In Europe, where there's less Starbucks to go around, mobile wallets did just $100 million in transactions in 2012.

In theory, that should change by 2017, when Berg estimates that mobile wallets will handle transactions worth $60 billion in the Euro zone and $44 billion in the U.S.—almost all of it from "universal" wallets that can be used at almost any store, not proprietary apps like the one that drives 3 million mobile transactions a week at Starbucks.

The trouble with predictions like this one is that we've heard the story before and it hasn't come close to coming true. It's based on some perfectly reasonable data about the number of smartphones that will be equipped with near-field communications (NFC) chips over the next few years so they'll be able to do contactless payments. Why wouldn't those phones be used for that?

In fairness, Berg telecom analyst Lars Kurkinen does have an answer to that question. It's just not one that pay-by-smartphone fans will like. "People do not have a problem with cash or payment cards today," Kurkinen says. "Value-added services that enable new shopping experiences before, during and after payments will be what truly distinguish mobile wallets from the traditional payment instruments."

In other words: You know those NFC smartphones that were going to revolutionize in-store payments and let customers leave their wallets at home? It's not about payments or cash. It's about using the mobile phone to make everything surrounding those payments somehow more valuable, or fun, or possibly...heartwarming? At any rate, finding that mysterious something is all that's standing between retailers and $100 billion in mobile-wallet transactions in 2017.

Well, that and Starbucks.

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