Microsoft Wallet: Barely There in Mobile Payments, and Soon To Be Gone for Good

Microsoft Corp. says it plans to retire its Microsoft Wallet mobile app, a distant also-ran in the mobile-wallet market, on Feb. 28.

The disclosure came in a brief recent post on a company Web site. “Starting on Feb. 28, 2019, the Microsoft Wallet app will be officially retired,” the post says.

The post gave no explanation about why Microsoft is folding its mobile wallet after a run of just over two-and-a-half years. But the wallet’s demise seemed inevitable when Microsoft announced this week that it will end support for its Windows 10 Mobile operating system next Dec. 10.

A spokesperson for Redmond, Wash.-based Microsoft did not respond to a Digital Transactions News inquiry by late Wednesday.

Microsoft Wallet with its Microsoft Pay service enabled contactless point-of-sale transactions via near-field communication technology, just as Apple Inc.’s Apple Pay for the iPhone works and the many phones running Alphabet Inc.’s Android operating system support Google Pay. But only a few smart-phone models run Windows 10 Mobile.

At the time of Microsoft Wallet’s introduction in June 2016, Microsoft had only a 2.4% share of the U.S. mobile operating system market. The leaders by far were Android from Alphabet’s Google unit at 53.5%, and Apple’s iOS with 43.3%, according to digital markets researcher Comscore Inc. More recent figures were not immediately available.

“The primary issue comes down to operating system market share,” Jordan McKee, research director of emerging payments technology at New York City-based 451 Research, tells Digital Transactions News by email. “With iOS and Android operating systems dominating the smart-phone industry, the addressable market for the Microsoft Wallet was rather limited. Layer in the already low consumer adoption rates for contactless mobile payments and it is clear that the Microsoft Wallet was doomed from a user-adoption standpoint from the start.”

Thad Peterson, a senior analyst at Boston-based Aite Group LLC, adds that “it’s always about the value proposition.”

“Mobile wallets in general haven’t yet gotten traction with the support of three of the largest brands in the world,” Peterson says by email. “Also, mobile wallets need to be device-focused to optimize the performance of the app.  That wasn’t something that Microsoft had.”

Microsoft Pay will still work for online purchases through Microsoft’s Edge browser, according to press reports.