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Digital Wallets Are Coming: Are You Ready?

The rise of the smart phone has provided us with opportunities to do almost anything — no matter where we are. Indeed, many of us take advantage of financial apps on our phones that allow us to track our spending and keep up with our accounts. There are even apps that allow you to store loyalty card and coupon barcodes [3] on the phone for easy scanning. Banks offer apps that allow you to engage in different transactions via your cell phone. However, these apps have stopped short of being truly universal payment devices.

Until now. With the recent release of the Google Wallet [4], a new era is dawning for smart phone users. Using near field communications technology, you can wave your cell phone in front of a card reader and use that as a credit card; rather than carrying around a wallet, you could just bring your smart phone.

Digital Wallet in Your Pocket

Google’s wallet is fairly basic; it only works with a special Google “card” or with certain Citi MasterCard products. This is far from universal. In the fall, Visa is planning to release its own digital wallet. The Visa Digital Wallet [5] will feature the ability to access various payment options — even at the store checkout. Like the Google Wallet, near field communications will be used to initiate transactions in the “real” world point-of-sale locations. The Visa Digital Wallet is billed as a one-stop place to control all of your online and offline payments, and will feature person-to-person payment ability.

Near field communications is being billed as the next step beyond RFID transactions. This technology is said to be more secure, and it should allow for contactless transactions at a number of stores. Some museums and other organizations use this technology in exhibits and to provide information to patrons via their own mobile devices. What scares more people, though, is what happens if your device is lost or stolen [6]. With your wallet digitized and stored on the phone, it could mean instant financial destruction in the wrong hands. (There are apps you can purchase that will allow you to lock down your device when it goes missing, or remotely erase all the information on the device.)

Even if You’re Ready, Are the Stores?

Of course, even if you are an early adopter, choosing to digitize your wallet, it doesn’t guarantee that everyone else will be as enthusiastic. Digital wallets require that businesses use special readers that are compatible with near field communications technology. These readers can be expensive. So, even though you might be able to use your digital wallet to make purchases online with your device, you might still have to carry your “hardcopy” wallet around with you as you frequent brick and mortar stores.

It seems clear that the digital wallet is likely to be the wave of the future. If you have a smartphone or tablet device, it might even add some convenience to your life. However, until the stores adopt the technology, the digital wallet may not do you much good outside of cyberspace.

(Photo: visualpun.ch [7])