LifeLock Buys Lemon, Prompting: What’s the Future of Mobile Wallets?

More than half of American adults carry smartphones, according to the Pew Research Internet Project. And while we’ve no stats to back this up, we think just about everybody carries a wallet. It makes sense, then, that mobile payment systems—aka “mobile wallets”—are gaining acceptance in today’s marketplace. But is the mobile wallet the wave of the future or simply a passing fad?

LifeLock Acquires Lemon

At the end of last year, leading identity theft protection provider LifeLock acquired Lemon, a digital wallet platform that enables users to store their payment cards, loyalty cards, identification and more on their smartphones. According to LifeLock.com, the company spent approximately $42.6 million on the acquisition.

So what does LifeLock see in Lemon? Perhaps the company saw Gartner’s 2012 assessment of the worldwide mobile payment market, which the respected research firm predicts will be worth $617 billion with more than 448 million users throughout the world by 2016. A growing number of companies are putting their weight behind mobile wallets—and the technology that makes them possible—as well, including Near Field Communication (NFC), which allows smartphones and other devices to communicate with each other through “bumping” and proximity contact.

It’s little wonder that LifeLock is leveraging Lemon’s technology for its own LifeLock Wallet, which will replace Lemon Wallet Plus. It ties into the company’s portfolio of identity protection services, and the combination of identity theft prevention tools and mobile wallets should give LifeLock customers greater confidence about the security of their information.

While Lemon is merged into LifeLock’s suite of services, Lemon Network seems poised to be left behind. According to an article on TechCrunch.com, LifeLock is considering an evaluation of the fledgling mobile checkout service—but it’s more likely that it’ll be shelved pending any further innovations, especially in the face of competition from Google Wallet, PayPal and Venmo.

What’s in Store for Mobile Wallets?

As more people warm up to the idea of paying for goods and services with their smartphones, mobile wallets and other payment options are likely to grow in prominence—but only if retailers are willing to shoulder the expense and effort of accommodation through point-of-sale (POS) equipment upgrades. According to Digital Trends, retailers are concerned about the lack of return on this kind of investment, considering the high cost of POS equipment and potential transaction fees, similar to those of credit and debit card transactions.

Another problem comes in the form of NFC availability on smartphones. Although some experts believe that NFC-equipped handset penetration will reach 51 percent by 2015, Forrester predicts that NFC adoption will move much slower, with other proposed hardware-agnostic mobile payment options filling the void.

On the other hand, many companies are positioning themselves to be on the ground floor before mobile wallets truly take off. Larger retailers and major adopters of NFC and mobile wallets see the technology as a near-term opportunity, despite the continued emergence of cloud-based solutions and other alternatives.