Mobile wallets: Everything you need to know

Mobile wallets: Everything you need to know

Russell Burry
Russell Burry

Russell Berry, founder of explains what mobile wallets will mean to you.

With Google launching its new Android phone that aims to replace credit cards, and Apple’s forthcoming iPhone 5 due to launch in spring 2011 containing an inbuilt near field communications (NFC) chip, mobile payments on the go are getting closer to reality. 

The whole idea behind the mobile wallet is that consumers will soon be able to use their mobile device as an extension of their wallet. So instead of setting off every morning with your mobile phone, wallet and keys, just your mobile and keys ought to do it.

Your mobile will soon take the place of your debit and credit cards enabling you to pay for goods and services, such as your morning coffee, train ticket or even petrol for the car by simply waving your mobile phone equipped with an NFC chip in front of a register, turnstile or even a poster.


How does it work?

NFC is a short range, high frequency, wireless communications technology that enables the exchange of data between devices over some 10 centimeters (four inches) apart. The technology is set to revolutionise everything from payment systems to home networking. 

In the next few years NFC chips are expected to find their way into not only mobile phones, but also PCs, consumer electronics and industrial equipment enabling real life objects to get connected to the internet and start talking with one another.

NFC built into the new iPhone 5.0 heralds the start of contactless credit card opening the door to a whole new arena of mobile commerce, allowing users to carry cash and credit inside e-wallet applications.

Google’s Eric Schmidt really believes the mobile wallet can replace your credit card, he was quoted saying recently. He also said: “The reason this NFC chip is so interesting is because the credit card industry thinks the loss rate is going to be much better, they’re just more secure.”


Are we really close?

Analysts at technology consultancy Gartner say it’s likely to be 2015 before most consumers use their mobile phones to manage payments, coupons, loyalty points, and gift voucher transactions.

There are two main reasons for this. While we’ll see the first wave of NFC-enabled devices introduced in 2011, there is a massive lack of devices that are actually capable of reading the NFC chips, and many believe this is a far more difficult market to penetrate.

Getting retailers to add this technology requires them to invest in upgrading their technology when there appears to be nothing wrong with the existing model of accepting credit cards.

It will take a few years before the infrastructure is in place for mobile wallet payments but in the meantime you’ll probably see larger retailers embracing the technology for trialing coupons and NFC-aware promotions.


Where are the major players?

Secondly, we’re waiting for the major players to decide which way to use the technology. For example, China Mobile, the world’s largest mobile operator, recently announced its own service, based on a technology that competes with NFC called RF SIM. MasterCard MoneySend’s mobile service in the US and Nokia’s Nokia Money global service don’t use NFC either.

It will certainly take time for the market to work out which technologies and business models work best before we’re all embracing mobile wallets.

But I’m really excited about the new technology and the opportunities it offers for mobile marketing, especially the ability to drive remote transactions such as scanning a NFC-enabled advertisement to make a purchase. Exciting times ahead! is a fast growing SME that offers mobile and PDA application solutions that help organisations communicate with their customers through custom mobile devices.

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