Pin It

Not your Father’s Wallet: Digital and Mobile Wallets Change the Way We Interact with Money

These days consumers have such a wide range of payment options, you could go for weeks without ever needing to use actual cash. Between credit cards, debit cards, checks and e-wallets, printed money has almost become a thing of the past.

Slowly Going Mobile

Mobile wallets, such as Google Wallet and ISIS — the joint venture from unlikely bedfellows AT&T, Verizon and T-Mobile — represent the newest way to pay. The point of a mobile wallet is to turn your cell phone or tablet — that’s the mobile part — into a payment device — the wallet part. These wallets take advantage of NFC-enabled devices and payment terminals to allow users to make in-store purchases without the need to take cash or cards out of their conventional wallets. At least, that’s the plan.

The adoption of mobile wallets has been slow in the US. The ISIS mobile wallet was first announced over two years ago, November 16, 2010, but the service just became available in October, and only in Salt Lake City, Utah and Austin, Texas.

MCX, or Merchant Customer Exchange, is another upcoming player in the mobile commerce market. This new joint venture features some of the biggest names in American retail, including Wal-Mart, Best Buy, Target and 7-Eleven. While the service is still under development, the fact that so many big name retailers are involved makes this venture worth noting.

While mobile wallets have yet to truly catch on in North America and Europe, Japan’s NTT DOCOMO has had success with their “Osaifu-Keitai,” which literally means “Wallet Phone.” Their first mobile wallet capable phone was made available in 2004; today the technology is used by over 10 million Japanese. While Osaifu-Keitai is a registered trademark of NTT DOCOMO the term is now used in Japan to mean any phone with mobile wallet capabilities.

Sony has played a big role in this project by providing the FeliCa contactless smart card that makes the mobile magic happen. Now MasterCard has joined in as well, they will be incorporating their PayPass system into the project, which is already up and running in 41 countries.

The Digital Difference

What is a digital wallet? Digital wallets are different from mobile wallets because you do not necessarily need your phone or mobile device with you to make payments. While it’s sometimes hard to distinguish between the two types of electronic wallets, the players in this field certainly feel there are important differences. At the recent Money2020 conference in Las Vegas, there were some heated exchanges on this exact subject.

With the emergence of e-commerce and internet shopping, digital wallets, or e-wallets, have already become a staple in many households, both in the US and around the world. E-walletsH, like the one provided by Payza, allow consumers to load and store funds securely on the internet so they can make purchases without the hassle and potential risk of filling out their credit card information everywhere they shop online.

Mobile wallets also hope to play a role in the e-commerce space. Google Wallet, which launched August 1 this year, allows online sellers to create merchant accounts and process Google Wallet payments.

According to recent statistics, online commerce represents less than 10% of total commerce, but that still means billions and billions of dollars are spent online each year.

So what’s your favorite way to pay? Do you still like to use cash whenever possible, or do you prefer the advantages of credit cards with cash-back incentives and other rewards? Have you already gone digital or even mobile? Let us know. Leave a comment below or join the conversation on Facebook and Twitter.

To learn more about e-wallets and mobile wallet, read our other articles about recent developments in the online payment industry:

How Mobile Phones are Impacting Payment Processing

Banking Takes a Backseat to Technology