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Wells Fargo Bank N.A.’s announcement Tuesday that it would launch a mobile wallet with payments capability built into the Android version of its banking app could be a win for the bank, and herald similar moves by other banks.
That’s the assessment from Daniel Van Dyke, an analyst at Javelin Strategy & Research who specializes in wallets and mobile banking. Earlier this year, Javelin’s “What’s In Your Mobile Wallet” report, co-authored by Van Dyke, predicted that financial institutionswould take on a higher profile in mobile wallets after giving some ground to non-bank financial providers such as PayPal Holdings Inc. and Apple Inc.
San Francisco-based Wells Fargo expects to launch the wallet this summer. It will enable bank customers who use Android smart phones to add eligible Wells Fargo credit and debit cards as mobile-payment instruments.
“Wells Fargo’s decision to offer a mobile wallet is a win for the bank—as it reinforces the Wells Fargo brand with its mobile-first customers—and a win for the bank’s customers, as they prefer to turn to their primary bank as a wallet provider rather than Apple or Google,” Van Dyke says in an email to Digital Transactions News.
The Wells Fargo Wallet also will enable cardholders to make cardless ATM transactions. Wells Fargo says more than 40% of its ATMs will have near-field communication (NFC) capability by the end of 2016. NFC and host card emulation, which enables issuers to create NFC wallets without a chip, called the secure element, is the technology behind the mobile-payments function, too. An iOS version of the Wells Fargo Wallet is not available because Apple’s iPhone does not use HCE, Jim Smith, head of Wells Fargo virtual channels, says via email. An iOS version of the standard mobile-banking app is available.
Wells Fargo is offering the integrated wallet to make it easier for the bank’s customers to use their credit and debit cards for mobile payments. “Rather than download a separate app or take a picture of your card, Wells Fargo Wallet for Android is part of the native Wells Fargo app, and Wells Fargo cards can be added with the click of a button,” he says. “Additionally, for more seamless money management, customers may view account balance information within the app before and immediately after a purchase.”
Consumers can use one of three ways to pay with the wallet. One is to unlock the phone with a PIN or pattern lock and hold the device close to the NFC reader. The wallet launches and the contactless payment will initiate automatically. Another method is after tapping the Wells Fargo app icon to open it, the consumer clicks the Wells Fargo Wallet icon and enters her wallet access code. To pay, she presses the Pay Now button and holds the device near the reader.
The third way is to log into the mobile-banking app with a username and password. Then, tap the Menu button and select the wallet option, press Pay Now and hold the device near the reader.
“We expect that Wells Fargo’s announcement will be the first of many bank-led wallet initiatives to be announced this year—ranging from community banks to others among the top five,” Van Dyke notes. “The card networks and core providers are all working on wallet solutions to help FIs regain the leadership of this space.”
How they do that will differ. “Some FIs will offer separate wallet and mobile-banking apps initially, largely for speed-to-market reasons, but longer term, the value of integrating this payments functionality alongside mobile-banking features will win out,” he says. “Wells Fargo’s launch should help reinforce the synergy of this approach.”
