When Will The Smartphone Really Replace Your Wallet?

If recent data and tech developments are any indication, sooner than later.

When Will The Smartphone Really Replace Your Wallet?

That thick slab of leather bulging in your back pocket or purse? Get ready to leave it on the dresser.


According to some recent stats from analytics firm Flurry, the smartphone–driven by iOS and Android–has become the fastest-adopted piece of consumer technology ever. Twice as fast as the Internet boom, three times faster than the recent social net boom, and ten times faster than the PC explosion in the 1980s. And that’s internationally, too. Built into this boom are the myriad forces working to replace your wallet with your smartphone.

It starts with Google Wallet. Thus far it’s been a fairly limited experiment that began in the U.S. and had very moderate goals. But yesterday Robin Dua, head of project management for Wallet at Google, spoke during a YouTube Q&A session and hinted that his Wallet may soon be expanding.

As well as its core wireless payment and loyalty card systems, Wallet may soon integrate ideas from Apple’s yet-to-be-released Passbook app and also act as a digital locker for your ID documents, boarding passes, concert tickets, and so on. Essentially Google’s taking aim at replacing all that plastic and paper documentation you carry around to identify yourself to merchants and other entities, and integrating their digital replacements directly into its own service. It’ll make money from this likely by profiling you for ads or extracting a small transaction fee per payment or by other more subtle means.

Apple revealed Passbook earlier this year pretty quietly, although there was a lot of positivity about the idea (and a couple of justifiable quibbles). It is not a digital payments service, but it is designed to do all those things Google now wants Wallet to do. Coming with Apple’s signature easy-use UI, it has the potential to appeal to dutiful iOS users.

Then there are the rumors suggesting Apple would add a mobile payments option to Passbook at some point–it’s got the international influence, money, and bravado to try to revolutionize digital payments. Apple also has strict control over its device’s physical properties–an advantage over Google, which only really “controls” the Nexus range of Android devices.

And a freshly granted patent tells us that Apple is very much investigating how it could make mobile payments work frictionlessly in the real world. As points out the patent for “motion-based payment confirmation” looks a bit innocuous, until you realize that if it were integrated into an iPhone with NFC, it would create a very interesting payments solution. It’s Apple trying to make digital payments more meaningful with a natural user interface design. For example, by moving graphical elements on the iPhone touchscreen, you could approve a sum of money to be paid to a recipient. But it also allows for physical motion of the phone as a confirmation gesture–perhaps a hand movement like deliberately moving the digital cash pile from your phone to a merchant’s cash register or so on.


Apple’s patent describes a finesse, a piece of polish to make the process of wirelessly paying for something a little easier on the payee’s mind (and possibly a little more secure, thus reducing the number of accidental payments). It comes after many earlier Apple patents that describe really clever ways to transform shopping and even getting money from an ATM in fast and secure ways. Apple really does have designs on your wallet, and with recent rumors that the next iPhone has an NFC chip aboard, the existence of Passbook is even more intriguing.

And if it’s not a firm like Apple or Google, then companies like MasterCard (intimately connected with many of those pieces of card-shaped plastic in your current wallet) really are thinking about what comes next. MasterCard just revealed it has partnered with Everything Everywhere, the U.K.’s biggest mobile phone network, in a big push to take Britain into the future of mobile payments. MasterCard’s also a founding member of Google Wallet; it recently signed up to the ISIS collaboration to bring NFC payments to the U.S. and its PR notes that it’s “now working with the largest operators in Europe to help pursue [its] vision of a World Beyond Cash.”

Meanwhile ISIS has revealed that it’ll actually be hitting American streets in September, with a simultaneous effort by AT&T, Verizon, T-Mobile and Verifone–which makes payment terminals and which has previously promised to push NFC payments into the market. T-Mobile is the smaller network in the group and only carries four NFC-equipped smartphones so it has said it’ll release “many more”.

Separately, PayPal is maneuvering in its own way to change mobile payments–recently partnering with Discover and it’s also testing mobile payments in McDonald’s restaurants in Europe. Other entities, like the Czech national bank are making their own unilateral moves to enable mobile payments–and the iKarta system is even iPhone-based, using an add-on piece of hardware so clients can shop with it using wave-and-pay gestures. The Chicago Transit Authority has moved to allow contactless payments on its busses and metros, which should allow mobile phone payments.

Add all this together and you get a concerted effort by many global players to change how you think about wallets. Google’s Dua has the final word: “We want you to be able to leave your leather wallet at home and carry your phone and transact with that as your primary transaction device.”

[Image: Flickr user Sheng Han]


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