2014-05-16 07:54:54
Andrea Murad
Kevin Raposo first noticed the Google Wallet app after he purchased his Nexus 5
smartphone. It wasn t long before the Boston-based communications professional
was sold.
Now, instead of searching through his wallet for cash or a credit or debit
card, he pays with a mobile wallet when he can.
I was one of those guys who carried a big wallet and it was uncomfortable
sitting down, said Raposo, who also worried about pickpockets with his
over-stuffed wallet.
He now only carries a cardholder with his driver s license, bankcard and
company credit card. I rely on my [mobile] wallet and do keep a credit card in
the car for emergencies.
Mobile wallets essentially a virtual wallet on your phone can hold a
combination of credit and debit cards, bank account information and loyalty
cards. The downloaded or preinstalled app allows users to transfer funds from
one account to another via email or SMS and pay at certain restaurants and
merchants.
At a growing number of merchants, you can pay by tapping your smartphone
against a specially-designed device. Users enter a pin to access the wallet,
and a lost smartphone can be wiped clean remotely from another device there s
no need to call banks and credit card companies.
With more of us strapped to smartphones, it s no wonder that the idea of the
mobile wallet is gaining in popularity.
The value of the mobile wallet is around the convenience and simplicity of
having everything on the device, said Jaymee Johnson, head of marketing at
Isis in Seattle, a joint venture between AT&T, T-Mobile and Verizon focusing in
the mobile payment space.
No need for cash
While credit cards still reign globally, mobile-wallet technology has been
dominant in Asia, parts of Africa and South America. In cash-based economies
with established mobile-phone networks and weak banking infrastructures, mobile
wallets eliminate the need to carry cash. M-Pesa was launched in Kenya in 2007;
today, at least a third of the country s gross domestic product is transferred
through the system.
We re in a tale of two cities the developing world and developed economies,
said Jim Bailey, senior managing director in Accenture s Payment Services
practice in Atlanta. If I come to New York City and take a ride in a cab,
there s no difference in pulling my card out of my wallet versus paying with my
phone. In Africa, it saves me a 30-mile walk to the village to make a payment.
In parts of North America, Australia, Europe and Southeast Asia, where credit
cards and smartphones are prevalent, mobile wallets focus on electronic
transactions. Third-party vendors, like Google in the US and Vodafone SmartPass
in Europe, allow users to hold as many cards in their wallet as possible.
Banking institutions, like Westpac in Australia and Garanti Bank in Turkey,
look to improve the customer experience with mobile wallets, while merchants,
like Starbucks, embed reward programs into their mobile apps.
I used to tap my card, now I tap my phone, said Sam Shrauger, senior vice
president for Digital at Visa Inc, based in Foster City, California.
For an international traveller, a mobile wallet can be a blessing. Money flows
from developed nations to developing economies, like Malaysia or Uganda, said
Khalid Fellahi, general manager and senior vice president for Western Union
Digital in San Francisco. The customers with a mobile wallet also have the
possibility of doing it the other way around: initiating a money transfer from
their mobile wallet to anywhere in the world. It s a two-way transfer.
The tap and pay option requires an NFC-enabled phone that can communicate
wirelessly with a payment terminal. Currently, about 18% of phones that are
shipped globally have NFC chips, but this will rise to 64% in 2018, according
to IHS Technology, a global information firm.
It ll be an evolution and not a revolution, said Shrauger.
Think you might want to make the switch to a mostly-mobile wallet? Here s what
you need to know.
Loyalty is effortless
There are opportunities to have offers to automatically redeem, said Rob
Skinner, director at PayPal UK in London. Most of us get coupons through the
post or loyalty cards, but increasingly we don t want to carry those around
with us. But we are carrying a mobile phone.
Along with credit and debit cards, users can scan loyalty cards into their
mobile wallet app. To incentivise consumers to switch to mobile wallets,
companies like ISIS and American Express are offering generous benefits in the
US for a limited time. Among them: American Express gives consumers $1 back
when they tap and pay, up to $50 a month, and a free smoothie or juice when you
tap and pay at Jamba Juice.
They re fast, but don t always work
NFC-based wallets can be used anywhere in the world where contactless payments
are accepted they work great when topping off a parking meter or paying for
parking at a train station.
Of course, If you don t have good mobile service at an area, it won t work,
even if a merchant has the requisite hardware, said Ido Gaver, chief executive
officer of LoyalBlocks, a loyalty marketing firm based in New York. He s seen
that firsthand. For instance, once he tried to pay his taxicab fare at the
airport and the driver s mobile device lost connection with the server. He had
to use a credit card.
Tap and pay isn t always convenient
Although using a mobile wallet to pay for purchases may be cool and
interesting, if you re in line with two children and people are screaming at
you to make your payment, you ll likely revert to what you always do and get
your card out, say some users.
Most mobile wallets, by the time I ve ended the phone call, opened the app and
swiped my phone, I could have put a 10 pound note or paid with a payment card
and walked out, said Alistair Newton, research vice president of Banking &
Investment Services at Gartner, an information technology research and advisory
firm, in London.
It doesn t have that simplicity where it s just easier to use my phone too
many wallets can t get the balancing act right, said Newton, who has used
mobile wallets.
They re more secure, but less private
Most people notice they ve lost their phone within an hour, but they may
realise a day later that they ve lost their wallet. Information in a lost
wallet could be gone forever, but a lost smartphone can be wiped clean within
minutes from another device or a desktop.
Consumers are concerned about security, but anything on mobile payments has to
follow the same strict security that we have already, said Mary Carol Harris,
director of Mobile at Visa Europe based in London. Contactless technology is a
layer on top of the chip and pin credit-card technology used in Europe for more
than 10 years.
Although your information is more secure nowadays if you lose your phone, very
few companies see inside your physical wallet, said Newton. Data about shopping
habits and loyalty card usage is very valuable to the company that owns your
mobile wallet app. Depending on the apps you ve installed, they use the data
for everything from your general location to what, where and when you buy an
item to the news you re interested in reading.
A lot of [companies] are looking at the data on your phone, Newton cautioned.