Is Uber the accidental digital wallet?

It’s safe to say that the adoption of digital wallets has been slower than most people thought. The reasons are several. Perhaps the most important reason is that credit cards work really well, no matter what you might feel about their associated fees. Put simply, setting up a wallet for the sake of setting up a wallet doesn’t feel all that compelling to many users when credit cards are easy to use.

All that changed when I recently used Uber for the first time. Firstly, I had to create a digital wallet if you will. For the service to work the way it’s designed you need to store a card on file. Here’s what’s different though. I quickly realized once I went through this step that I’d never have to use a card again - at least with Uber. Setting up a wallet usually means switching out one way to pay with another way to pay. Setting up a wallet with Uber means never again worrying about paying! Flashbacks to hard steel credit card forms or mobile payment swipers that couldn’t connect to the network while idling at the airport was all I needed to make the effort to sign up.

Secondly, there’s a trust factor in creating a digital wallet. Now I trust Uber as I’ve used them several times successfully. To me, Uber is about a super convenient way to use a service with no payment friction. That feels potentially much broader than just riding in a car.

The final piece is that Uber is on my mobile device and, again as part of the core offering, allowed to know exactly where I am. So now if I trust Target or Macy’s and Uber can I enable Uber to pay for Target? Uber knows when I enter the store. (Yay Target can market to me!) I authenticate to my phone and when my total is accrued I tell the checkout something like “Uber 78445” No need to open up and pull out anything. Uber knows it’s me via geolocation and authenticating to my phone as I enter the store.

I doubt the flow would look exactly like this. However, Uber (and other services like AirBNB) have a leg up on a pure play wallet. They have an initial value proposition whereby setting up a wallet is a by-product. They then build trust and, in Uber’s case, are location driven. It strikes me as very powerful.

I doubt Uber is thinking along these lines though. Otherwise they wouldn’t have joined Braintree’s efforts to pool all of their collaborative consumption/marketplace customers credit card data together. I’m sure they see lots of parallel opportunities and have to stay focused. Nevertheless, I think the long term winner of the digital market might just be the “accidental” one vs the “pure-play”


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