An Introduction to the Mobile Wallet

Oct 30, 2011

Most of us have a wallet or a purse. Well, we have some form of flat pocket or hand sized case which we use to store and transport our money, cards, ID, photos, receipts and notes. Wallets are not a new concept. They have been around since the times of the ancient Greeks (yes, even Perseus carried Medusaâs head in his Kibisis or Wallet!) all the way through the renaissance and to the modern age.

However, the wallet is going through a radical change, and itâs all due to Smartphone technology.

The traditional wallet is being replaced by the digital wallet (of which there are four primary models). QR Codes, NFC Chips and the some well established organisations are driving this change with relentless speed, and we should see our business and currency environment start to change rapidly, beginning from the end of this year.

Are Mobile Wallets going to be the next leap in our economy and technology? Letâs delve a little further ...

The days of your thick bulky wallet with all its receipts, credit cards and coins are over. Well, we now live in the world where you can surely âleave home without itâ...

As we move into a more digital and mobile age, we leave behind the needs of the old world. We no longer need to present our IDs as we carry it around on our phones. We can easily swap contact information and business cards with apps like Bump. Our smartphones have great cameras on them, with some funky apps, so our photographs can now be taken and stored without the need for any printing.  These days our receipts are emailed to us, and we can simply log into our email accounts to check this on the spot. As can be noted, the need for a physical traditional wallet is now falling into the same that as that of the camera, the walkman, the bookstore, the record store and the newspaper.

So how does a Smartphone become a wallet?

There are four primary models to utilise mobile technology into making a Smartphone into a wallet. These are:

Premium SMS Based Transactions

Consumers send an SMS text message to the billing party, and the cost of the goods or service is billed against the consumerâs next phone bill, as provided by the Phone Network Service Provider.

Direct Mobile Billing

When a consumer is on an e-commerce site through their Smartphone, they have the ability to make a payment through the online facility (e.g. online gambling or gaming site) and this charge is then carried onto the consumers Smartphone bill. This avoids the need for the consumer to set up a credit card debit, or even have to register with sites such as PayPal.

Mobile Web Payments (WAP)

Using Wireless Application Protocol (WAP), this option allows the consumer to use applications which have been downloaded / installed on the Smartphone (or web pages) to make the payment. Sometimes this requires pre-registration of the account to be debited, other times the mobile account is directly charged through the Phone Network Service Provider. This is similar to the services that Amazon Payments and PayPal offer.

Near Field Communications (NFC Chip)

The hot topic of the moment. NFC chips. Most new smartphones are manufactured with them in it. If you purchased a phone from some of the big name manufactures (e.g. LG, Nokia, Motorola, RIM, Samsung, and Google) from 2010 onwards, then you are more than likely already equipped with an NFC chip. Apple are rumoured to release the iPhone5 with an inbuilt NFC Chip.

The NFC Chip has many uses, to name a few:

  • File Sharing
  • E-Business Cards
  • Ticketing
  • Boarding Passes
  • ID Card
  • Door Entry Key Card
  • Coupons Delivery
  • Tour Guide
  • E-Money

So how do Smartphones actually interact with the real world? What brings the NFC chip outside of the Smartphone environment and integrates it with the world around us?

Two ways Smartphones allow information to be read, converted and used are:

QR Codes

A QR code is 2 dimensional square, which appears to look like a jumbled barcode. QR Codes can store information such as text, website URLs, ticketing information, tracking codes and purchase information to name a few.

NFC Readers

NFC Readers are devices, often connected to the point of sale / purchase / redemption of a product or service. They charge the NFC chip inside Smartphones, after a simple swipe of the Smartphone.

With all these uses, combined with the replacement of all the items your wallet you use to hold, it is easy to see why the Smartphone is very quickly becoming the wallet we will all use in the future. It will revolutionise the way that businesses operate, the way we manage our money and the way we interact with businesses.

Have you ever used your Smartphone to make a purchase? Leave us a comment about your experiences below.

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