White-label mobile wallet apps: Their importance for banks

“White-label mobile wallets, like those provided by Netcetera, are primarily used to make and manage payments,” says Jumaane. “They enable banks to offer a branded and customisable mobile wallet experience without having to develop the technology from scratch.”

Jumaane notes that the convenience of mobile wallets lies in their ability to replace physical wallets, allowing consumers to make payments easily using their smartphones. “It’s hard to live without your phone,” he explains. “So you bring that with you when you leave home, and you can leave your wallet behind because you can simply tap your phone to make payments.”

Perhaps it’s no surprise that, in recent years, consumers in most countries have been steadily moving away from cash.

But the role of mobile wallets extends beyond just payments. “I’d actually broaden the definition of a mobile wallet to include the non-payments use cases as well,” says Jumaane. “A white-label app serving as a mobile wallet can include things like Personal Finance Management (PFM) features to help support customers with managing their spending, personal ID, event tickets and boarding passes, for example.”

“Apple Pay and Google Pay have significant market share in countries like the UK, compared to using cash or card. And there are many other local payment methods across Europe, including Bizmo in Spain, Swish in Sweden and TWINT in Switzerland,” notes Jumaane. “But white-label solutions give banks the opportunity to compete in this space and offer their customers a comprehensive, branded mobile wallet.”

This multifunctional aspect of mobile wallets is a topic of ongoing discussion within the industry. “I think the definition of what a mobile wallet is will continue to be debated as the wallet’s capabilities continue to evolve,” says Jumaane. “Depending on who you ask, you’ll always get a different answer!”

Whether used for payments, identity verification or access to events and transportation, mobile wallets will play an increasingly important part in peoples’ lives as their capabilities grow.

Mobile wallets have seen varying levels of success across different regions and sectors, as adoption is closely tied to payment habits, cultural norms and trust in financial institutions.

“Mobile wallets as a whole have been very successful, from Apple Pay and Google Pay to local heroes like TWINT and Swish, which are essentially white-label app solutions. One thing that you can see is mobile wallets have been successful where cards have been successful.”

Account-to-account (A2A) payments have played a significant role in the success of mobile wallets in Europe, largely driven by banks seeking alternatives to card-based transactions to avoid fees from Visa and Mastercard. “All of the popular mobile wallets in Europe are offering account-to-account payment initiatives,” adds Jumaane. “I think A2A payment really needs mobile wallets to make it usable.” He explains that the symbiotic relationship between A2A payments and mobile wallets has helped drive adoption in markets where local banks have been pushing to reduce their reliance on card schemes and consumers are looking for alternatives to card-based transactions.

In terms of sectors, mobile wallets have found particular success in quick commerce transactions, such as buying coffee and getting food to go. “People tend to use them when they’re in a hurry, rather than in situations with larger transaction values, like when buying a car,” explains Jumaane. Public transport and closed-loop systems like fuel stations also tend to be common use cases for mobile wallets.

"Trust plays a crucial role in the adoption of digital wallets, and it's incumbent upon wallet providers to foster and maintain this trust by ensuring robust security measures, transparent policies, and exceptional user experiences."

Regulators play an important yet difficult role in ensuring mobile wallet systems are robust, resilient and competitive. “I think it’s very hard,” says Jumaane. “The role of regulators helps with cross-border payments but it’s clearly not simple."

A key area where regulators can make a big impact is in facilitating the use of local payment methods across borders. “It would be good for the role of the regulator, especially within the EU, to make it a lot easier to travel with your local payment method,” continues Jumaane. “Especially for people in countries like Switzerland, Sweden and the Netherlands, where local mobile wallets are so prevalent. It’s not a great experience when the wallet you use every day can’t be used abroad.”

But there’s a risk that increased regulation could also hinder progress and competition. “The approach taken by the European Payments Initiative (EPI) with the SEPA Instant Credit Transfer is an interesting case to consider,” says Jumaane. “The EPI’s decision to create a centralised solution for everybody, rather than focusing on making different local payment networks work together, raises questions about the potential impact on innovation and competition in the market.”

According to Jumaane, an ideal role for regulators would be to ensure interoperability between different wallet providers. “You now have a number of different white-label apps that specialise in their own fields,” he explains. “But rather than trying to integrate everything into one solution, it would be better if regulators focused on making sure these wallets were able to work together seamlessly. It’s a complex task, but I believe it’s the right approach.”

One area where regulators have excelled is in the standardisation of 3D Secure and EMV 3-D Secure (EMV 3DS) for online transactions. “It’s amazing that it doesn’t matter which shop you use online or which bank you’re with, the 3D Secure experience is the same,” says Jumaane. “And if a regulator can enable that for account-to-account payments or open banking usage as a whole, then we’ll see better take-up. With that, you’ll still have competition between the banks, the card schemes and the merchants, for example. So they can still adhere to 3D Secure and EMV 3DS, but the user experience is the same.”

Another positive example of regulatory intervention is the European Commission’s decision to require Apple to open up access to the NFC chip in their devices. This has allowed third-party developers to create innovative new tools and features, increasing competition and giving consumers more choice in terms of mobile wallet solutions.

As mobile wallets continue to evolve, their role in the future will be shaped by the ability to provide a seamless, standardised experience across different regions and use cases.

“Ensuring that customers get a consistent experience across mobile wallets, and making white-label apps more interoperable, is crucial,” says Jumaane. He notes that regulation can play a key role in achieving this standardisation, as seen with the success of 3-D Secure and EMV 3DS in online transactions.

Efforts to improve the interoperability between mobile wallets have already started in some regions. “In the Nordics, they worked on an initiative called P27 which was intended to enable cross-border payments and interoperability between wallets,” says Jumaane. “Unfortunately, this project did not succeed, but it at least demonstrates the growing recognition that mobile wallets need to work together seamlessly.”

“Having these local payment methods speak to each other is a big requirement,” says Jumaane. “It’s why cards work so well - wherever you are in the world, your debit or credit card works the same. Mobile wallets haven’t quite reached that level of standardisation yet.”

While payments may be the easiest part of mobile wallets to standardise, other use cases, such as identification, present more significant challenges.