Telcos, banks and technology companies have all taken their shots at mobile wallets, but as mobile commerce matures, the niche players are reaping the biggest rewards, according to Remitly CEO Matt Oppenheimer.

This is already evident in the demise of early mobile wallets like Softcard and the original Google Wallet, as well as the lackluster adoption of Apple Pay. Banks and credit unions have their own technologies in play, but their strategies are sometimes splintered by mobile operating system or geography.

"'Mobile wallet' often means bank or telco led ventures that do not solve customer pain points," Oppenheimer said. "A mobile wallet needs to solve actual problems."

Remitly is a digital remittance company that in December reached a $1 billion annual transfer pace for the first time. It focuses on transfers from the U.S. to the Philippines, India and Mexico, which make up about 35% of the $143 billion U.S.-originated remittance market, according to the World Bank,which reports the global remittance market totals $588 billion. Remitly supports remittances online and on mobile devices, a mix that gives it a way to use technology to address a specific need for a well-defined group of customers at a discount rate, Oppenheimer said.

"In the future, as more people have smartphones, companies that can build applications and products that directly address customer needs will have a huge opportunity," Oppenheimer said.

Given a random set of 100,000 Remitly transactions, fewer than 20 involve involve mobile wallets, Oppenheimer said. "We don't see a ton of demand for remittance in the prevailing mobile wallets," he said.

Remitly is battling on a couple of fronts. The first is as a tech-driven, more digital alternative to established remittance companies like Western Union and MoneyGram. That battle, where it faces off against other mobile-driven startups, has often been feisty.

"It's an exciting time for the industry, which is 150 years old—Western Union goes back to the 1860s," Oppenheimer said. "But things are switching to mobile now."

At the same time, Remitly hopes to beat broader mobile wallets to gain a share of the mobile transfer market. The company will rely on customer relationships that derive from an understanding of how consumers use mobile devices, rather than how consumers use financial products outside the mobile space.

Telco and bank-led models have had few successes, Oppenheimer said, and even the success stories like MPesa benefit from unique factors. Safaricom, MPesa’s operator, has 81% of the mobile users in Kenya and a favorable relationship with regulators, said Oppenheimer, who worked for Barclays in Kenya during MPesa's initial rise. In most markets, mobile network operators do not have such advantages, he said.

"To be successful, any payments provider needs to have both consumer and merchant customers," said Rick Oglesby, a senior analyst and consultant for the Double Diamond Group, adding Kenya's high percentage of feature phone mobile users made telcos the obvious choice.  

But due to the chicken-and-egg nature of technology adoption, the smart plays are niche plays, where it's feasible to gain critical mass in both consumer and merchant populations because both groups are smaller and have very specific needs, Oglesby said. Examples include college campuses, arenas, geographic areas and specific merchants like Starbucks.

"The news is bad for anyone, carriers and otherwise, that are trying to create a wallet with universal coverage, but there is significant progress in closed loop environments," Oglesby said.

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