What's Delaying the Digital Wallet?

NEW YORK (MainStreet) -- Banks and credit card issuers are certainly taking steps to enhance their mobile payment offerings, but widespread adoption of the technology may still be a long way off.

Just this week, Chase (JPM) and Capital One (COF) announced that their credit, debit and prepaid cards will be available on Isis, the mobile-commerce venture created by AT&T (T), T-Mobile USA and Verizon Wireless (VZ), by this summer. The move builds on partnerships Isis had already established with Visa (V), MasterCard (MA), Discover (DFS) and American Express (AXP) last July.

A full migration to mobile payment offerings seems to be still a few years away.

Amex also has planned for its own digital-commerce platform that it launched in March 2011 called Serve, planned for later this year.

But many industry experts believe the mass use of these digital payment platforms isn't as close as it seems. Visa President John Partridge even said in a conference in New York earlier this month that it would be some time before consumers fully embraced the idea of a digital wallet. Here's why:

The benefits of mobile banking are still unclear to consumers.
Mobile banking may sound awesome in theory, but research from Javelin Strategy & Research found that a very small percentage of consumers (12%) actually use their phones to make contactless payments.

"They don't see the benefit," says Mary Monahan, research director of mobile for Javelin. She explains that some banks are starting to do a better job of illustrating what mobile banking affords consumers, citing Chase's commercial that features newlyweds cashing checks while on their honeymoon as one example. But more financial institutions will need to make a similar advertising push to get reluctant consumers on the mobile payment bandwagon.

"You're trying to change 30 years of behavior," says Calvin Grimes, product manager of mobile solutions for electronic commerce system provider Fiserv. "In order to do that, you have to give [consumers] incentives."

Grimes says that these incentives can be related to saving time and money or to providing security enhancements.

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