Digital wallets becoming a reality

Mobile technology is making significant advances, replacing routine parts of our lives with one-touch solutions.

Mobile developers view everyday tasks and items as major chores. They ask; why have six cards when you can have none? Why go to the shop when the shop can come to you? Why carry a map, a camera, a newspaper, a music player?

Smartphone penetration in mature markets is pushing past 60 per cent and consumers are now familiar with using their mobile device for a variety of functions. M-commerce revenue has started to increase and people are accustomed to using their phones to look for directions, find reviews or seek recommendations of shops, restaurants or other outlets.

But these are functions that can be performed routinely on PCs or laptops, and the future of mobile technology is likely to see a move away from traditional desktop capabilities to unique attributes for mobile devices. The most prominent advance – and the one we are likely to see next – is the rise of the digital wallet.

Jared Newman of Time magazine said: “Imagine if, in addition to all the things your smart phone does now, it could also act as your keys to the real world.

“Instead of fumbling through a wallet for your credit cards, coupons, gift certificates, plane tickets, membership cards and receipts, you could simply tap your phone to a terminal. All the necessary information would load automatically, and then you’d confirm your identity with a thumbprint or PIN.”

How’s it taking shape?

It may sound like a scene from a futuristic film, but digital wallets can already be found in the economy, and considering the pace at which digital technologies can grow, it won’t be long before they become widespread.

A new app called Passbook has been developed on the latest version of Apple’s iPhone software that can store all your loyalty cards, tickets and coupons in a central location. Google also has developed a similar service as an extension of Google Wallet, which uses Near Field Communication (NFC) to make payments through the phone, where credit card details are stored in the cloud.

Near field communication is the real key to the success of the digital wallet and requires a simple tap of the phone to work. Rather than scrolling through apps or scanning bar codes NFC opens up an era of contactless payment, making transactions seamless.

Who’s doing it?

A number of ecommerce shops have incorporated mobile system payments within websites that are optimised for mobile users, in an effort to enable immediate purchase of products or services via smartphones and tablets.

In other areas, major banks and payment providers have also been taking steps towards launching contactless payment technology, which would turn mobile devices into transactional tools.

Visa and Mastercard are leading the way when it comes to contactless payments, both launching online digital wallet services earlier this year. V.me (Visa’s) and PayPass Wallet Services (MasterCard) offer solutions from familiar brands that will rival other services from firms such as Square, American Express, PayPal and Dwolla.

What does it mean for marketing?

The rise of near field communication opens up an array of opportunities for mobile marketing. By allowing consumers to process their own transactions conveniently, the mobile wallet will radically transform the traditional brick-and-mortar shopping experience.

Mobile payments will invariably lead to more customer insight and thus, more targeted marketing messages. With information on where consumers spend and why, as well as access to a digital wallet open to vouchers and offers, companies can give consumers incentives at the touch of a button which will be accessible and easy to use.