The walletless future

Freija van Duijne's picture

We know that the possibilities of our smart phones are virtually endless. One of the functions that we will see more and more are mobile payment services. Digital wallets are potentially everywhere. But would we, society as a whole, be willing to give up physical money completely?

Google Wallet, Paypal, ISIS (a consortium of telecom operators) and many more are experimenting with new modes of mobile contactless payment. There are developing all sorts of apps, trying new technology, working with banks and stores and run trials on the consumer market. Developments are very exciting. Mobile phones are at the center of payments, retail, advertising and social networks. And they create a rich source of consumer data. A true goldmine for most companies! So, it is not a surprise that so many players envy a stake in this market.

Mobile payment is buzzing in the air and there are wonderful opportunities. It fits perfectly with the new entrepeneurship of the 'gig economy', where all sorts of people start to share and sell home made products and services. But like always, there are also many hurdles. Technology is one thing that needs further investment. More intriguing is the fact that it brings payment into the hands of companies other than banks. The regulatory organizations have to develop new arrangements to ensure security adequately. It gives services providers an extremely rich source of data of people. In addition to everything you can learn from people by their activities online, their spending habits offline, income situation could also become transparent to these service providers. Who owns all that data?

However when the main security issues are solved, consumers will probably appreciate the convenience of mobile wallets. That is a big promise, and may explain for the proliferation of mobile wallet initiatives. And with many players on the market, consumers may have a lot options to choose their prefered service provider. But will they jump onboard that easily? And will all the merchants be convinced of the investment, when other electronic payment systems are operational in almost every store. It is not just a new technology and an interesting app that we are talking about. It is a systemic change, where customers, merchants, banks, regulators and many more have a say.

Meanwhile, traditional money won’t get lost. Hard coins are considered proven technology that has been around for ages. It is effective in all the unofficial economies that are also here to stay. That is, paying the babysitter, cleaning lady and handyman. Real money doesn’t leave digital traces. Sometimes that has a very profound function too.

Mobile payment teminal, in Norway Photo credits H Lundgard

Image: Mobile payment teminal, in Norway
Photo credits H Lundgard

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