Consumer digital wallet options
consumer will enjoy more digital wallet options in 2013, but expect lots of bumps in the road
Consumer digital wallet options:so many choices!
The world of digital wallet and mobile wallet is complicated right now,but you can find many apps to use today with most modern smart phones. From bank apps, retailer apps, a variety of digital wallet apps and 'tap and pay' on many mobiles can be used today, with much wider adoption over the next few years.
Find out more specifics from our detailed summary on these popular existing and future digital wallet choices
While available, don't expect a smooth process in every transaction, in fact expect bumps along the way. In 2013, digital wallet is beginning to become an option in our everyday life, starting with your bank and likely your local pharmacy chain and grocery chain too. Some get confused, but digital wallet includes really anything you'd put in your wallet, and a great way to start is with your everyday life. Banks are quickly adding apps to check your balance, see checks and even scan in deposits. Convenient! Grocery chain apps can let you add coupons and setup shopping lists for your app. Right now, I can look on my mobile and check my bank balance, pay bills, check my next doctor appointment, view my grocery list, and compare prices. Social is nice, but digital wallet makes errands and chores easier. Who doesn't like that?
You'll find the most current Android-based phones which are also NFC-enabled will give you the best options today and in the near-term as developer focus on attracting the most customers first, with modern iPhones a close second. Android is a bit more popular iphone retains a large market, and blackberry and windows have smaller but still popular platforms. Don't change your phone just yet, but keep in mind that if you have a blackberry, you may have less options.
what you need to know
what are the standards you need to know?
Digital wallet standards are still in 'flux' but the NFC is more a built-in phone capability and 'cloud' is app based. Expect both options to grow in popularity in an evolving marketplace. We view the two types as more complementary, and NFC can be an add-on feature as well. NFC is often either in the mobile SIM card or an embedded chip, but for consumers you're mobile or device will either be NFC-enabled or not.
simple digital wallet comparison by mobile platform
For the typical consumer, we recommend you choose a smartphone that is NFC enabled and on the current Android platform to maximize your options. iPhone will continue to have many options, and is a great fit for consumers who want simplicity in using their mobile as well as simply enjoying iPhone features in general. If you want more security and are willing to accept a bit fewer options. the latest Blackberry mobiles coming out are NFC enabled and we expect Blackberry to continue as a big player in corporate settings. Kind of like Volvo knows their 'brand' identity is safe cars, we think Blackberry will want to continue to excel and provide secure access. For digital wallet, customers may grow to really appreciate those extras.
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To be more specific, we anticipate Blackberry will continue to focus on being the choice of security and business, and any large financial companies and retailers won't want to lose BB users. However, when you aren't the 'big fish', selection and usability might be less robust compared to android apps.
For iPhone 5 and above users, NFC is not enabled via SIM or embedded chip, so the focus is on 'cloud' apps that still have robust security and we expect widespread adoption. NFC shouldn't be a 'deal breaker', since you will have plenty of options, and the focus on 'cloud' digital wallet apps makes sense. The encrypted data is not actual credit card info or account info, the real data is handled by the apps on their end. I like to describe this as similar to Amazon resellers. Amazon knows your account, and they are the payment between you and a re-seller. The re-seller doesn't get your account info, so you feel secure since Amazon is you 'trusted' transaction.
Thus, iPhone users are well supported today, but the near future things may change. Given Apple's resources, continued large market share, and past innovation strengths, we expect a bright long-term digital wallet future for iPhone. If you like the simplicity of an iPhone, we expect Apple iPhone users will be well supported in the digital wallet space for a long time.
is an NFC-enabled phone a must-have?
NFC has become a standard in most non-Apple IOS current smart phones released to market, included in the hugely popular Samsung Galaxy S3. While many consumers really aren't sure what it means or how to use this feature, NFC's near universal ubiquity means that NFC will be a key piece in where visa, master card and others lead the technology. Consumers won't need an NFC compliant mobile phone since mobile wallet apps can also provide secure transactions, and you'll see much of digital wallet broken down into 'cloud' or app-based versus NFC or 'built-in' concept.. For example, while Apple is rumored to be including NFC in iPhone 5s, today apple users can use wallet apps such as Square. If you want all your options, we suggest an Android mobile with NFC is your best bet,as Android's market share and NFC support provide the most options.
NFC is Near-Field Communication and is actually part of the mobile phone typically either via SIM card or embedded chip and can even be added to existing phones (see helpful add NFC tips from nearfieldcommunication.org. Near field refers to proximity, two devices need to be within 10 centimeters to communicate wirelessly, thus the term 'tap and pay' to describe a digital wallet payment. The term we think will gain traction is 'tap and pay', which has the great 'sticky' marketing holy grail where a simple phrase is meaningful, colorful, and concrete. Self-explanatory, and passwords will likely provide security protection as well.
what's coming up
We'd love to say that digital wallet is simple today, but you'll find 2013 remains a time of transition, increased options and increased choices. If you want simple but limited, you may want to stick with apple's since they tend to focus on design simplicity which can limit options. but makes transactions simple. Apple is more focused on the 'cloud' concept of digital wallet, focusing on apps such as Square for payments.
small business and digital wallet?
One area you'll find likely to embrace the technology is small business. Unlike most technology, small businesses is likely to be an early adopter since the payment side is actually quite simple. The ability to securely 'swipe' your credit card is available today via apps like Square at a fixed transaction cost. Apple's focus on design simplicity is likely to help small business adoption as owners have so much on their plate already, a simple, inexpensive way to process credit card transactions. As a consumer, you'll likely find using a favorite store app a good way to start using your phone as payment, especially when loyalty card and coupons are available as well.
is it secure?
Well, isn't that the real question here, and the one that will prevent many users from dipping their toes into the world of digital wallet at first. Just like your wallet, you'll continue to need to use passwords during transactions to ensure 'you are you', or require signatures, pin, pay phrases, much like done online today. That's how it's done today with debit cards, and will likely continue. You will also need to treat your phone like your wallet, keeping it secure by not losing the phone, reporting when lost, and password protecting your mobile. Apps will of course help secure and report lost phones to help as well. As with all transactions, you'll still need to use trusted retailers, contractors, etc.