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Mobile wallets and other payments of the future

Category Budgeting

Mobile wallet

Whenever I go out, I seem to have a growing number of things to carry phone, wallet, keys, security swipe and coins. Am I alone? Not being a huge fan of the ‘man-bag’, I’m pretty receptive to alternative solutions for de-cluttering my pockets; especially if the solution is more efficient and integrated with the technology I use on a day to day basis. Guest writer Justin Lim, talks to us about some innovative solutions including mobile wallets.

With the introduction of mobile wallet technology, pretty soon you’ll be paying for groceries by simply waving your smartphone over the terminal. But that’s just the beginning. The changes will go far beyond making the shopping line slightly faster.

Tap-and-go credit cards

Cashless payments with credit or debit cards have been embraced by consumers for decades. What MasterCard’s PayPass and Visa’s payWave allow you to do is simply wave your card over the terminal to make purchases. No need for PINs or signatures. As long as your card has a smart chip embedded, you are set to use the feature.

Digital wallets vs. mobile wallets

While digital wallets have been hailed as the next step in payments and foreshadow the death of physical money, many people out there are still confused by the concept. Simply put, digital wallets are synonymous with online wallets and have been in use worldwide for years. Mobile wallets can be seen as the natural evolution of the digital wallet, allowing you to use your smartphone or tablet to pay for purchases on the go.

Digital wallets

Digital wallets were first popularised by PayPal over a decade ago. If you’ve ever used PayPal to make a purchase online (e.g. eBay) then you’re already a digital wallet user. The idea is to link your credit card, debit card or bank account to a third party, which will act as a secure go-between to make online purchases or even pay bills. The features and benefits of digital wallets have grown in recent years, allowing you to better manage your money. There are now dozens of digital wallets available on the market, most of which are free to use.

Mobile wallets

These work in much the same way as digital wallets, but allow you to use your phone or tablet to make in-store purchases. Like the tap-and-go credit card, you simply wave the device over the terminal. Many of the big names in digital wallets are now moving towards mobile technology. To use a mobile wallet, all you need to do is set up an account with a provider (e.g. Google Wallet), link it to your credit card or bank account, download the app on mobile device and you’ll be able to ditch your chunky wallet.

Most providers use near field communication (NFC) to transmit the data from your device to the checkout terminal. So, if your mobile phone is NFC enabled, you already have the ability to turn your phone into a mobile ATM. Google Wallet, Square, MasterCard and PayPal have all developed mobile wallet apps. Unfortunately for Aussies, the availability of mobile wallets is virtually nonexistent. Thankfully, that should all change in the very near future.

Changes to your everyday living

  •  All in one: Having a digital wallet will make keeping track of loyalty cards simpler, and will even seek out deals and coupons for you. Instead of having to remember to use a points card, you can set your digital wallet to remember for you. You will even be able to set specific spending rules. For example, use Card A for purchases below $200 and Card B for anything more expensive.
  • We will see touch-and-go payment terminals everywhere: In Sweden, churches now have facilities that allow contributions via credit card[1]. Also, in many countries public transportation is all managed via NFC smart cards and mobile payments. Brisbane is one city in Australia that has already made the switch.
  • Crime rates: Without physical cash, criminals hoping to pick your pocket will instead find a password-protected mobile app. The prevalence of cashless payment in Sweden has seen a dramatic fall in bank robberies.
  • Tax evasion: Businesses that once operated mainly with cash will now have a more visible electronic paper trail to contend with.

The possibilities that digital and mobile wallets present to consumers and society in general are very exciting. Not only will their introduction make transactions faster, but smarter and more secure as well.

Would you use a mobile wallet if it was available?

About the author: Justin Lim is a freelance writer and has over four years experience writing on business related topics. He is a former journalist at Money Management, a financial trade publication and is currently freelancing, writing in a number of fields ranging from business to entertainment and regularly features in Yahoo Moneyhound and businessroom.com.