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Simplification is usually a good choice for finances whenever it is available, and the bulky wallet is due for a technological upgrade, simplifying back pockets of men’s jeans everywhere. I’ve received the occasional comment about my “George Costanza” wallet; as I collect receipts from my day-to-day transactions, the leather becomes increasingly distended. Google’s first in the United States on the train towards eliminating this particular bulge and lightening the load for those who carry cards and money in bags. In fact, Google re-purposed a clip from Seinfeld to tease the public about this forthcoming technology.

In Europe, this technology already exists, even if it isn’t ubiquitous yet: your mobile phone will be able to function as a payment mechanism with merchants who accept credit cards. New mobile phones will include a chip that securely transmits a credit card number of choice to a cashier’s receiver. Just like the PayPass or other credit card technologies that allow you to wave your plastic like a Jedi to pay for your groceries, cell phones carrying digital wallet applications will theoretically take the place of your bulky, card-filled wallet.

Despite strong marketing from Google and other companies getting ready to launch digital wallet services, there are still some barriers to this technology.

Most phones do not contain the NFC (near-field communication) chip that makes secure wireless communication between the phone and a retailer’s receiver possible. In fact, the Google Nexus S is the only phone in the United States that contains this technology as of today.
The Google Nexus S is only available on Sprint. Consumers who want to take advantage of this technology right away would need to leave Verizon Wireless or AT&T.
Not all credit card companies are on board. Google Wallet is launching with help from Citi and MasterCard. Visa, American Express, and Discover will operate with slightly different technologies. They’ve made the details available to programmers, though, and the issuers may be included in future versions of Google Wallet, or they will sponsor their own, competing applications.
Many people are still skeptical of security. I’ve often maintained that secure digital communication is more secure than handing your credit card to a waiter who disappears for five minutes, but there is a mistrust of credit card databases stored by financial companies. In order to use technology like this, you provide your credit card information to yet another third party.
With more of your financial information in the hands of others, you are open for more and better-targeted advertisements and unsolicited offers. Using a digital wallet will certainly require your agreement with a document outlining terms of use, and that document will undoubtedly reduce your rights to privacy. Your credit cards know where you spend your money and how much. Do you also want Google to know?
This service may replace your cash and credit cards, but that’s only part of your wallet. You may use your wallet to hold your identification and driver’s license, your health insurance identification card, your roadside assistance card, your mass transportation access card, your office security key, and your casino player’s club card, just to name a few. Some of these may be supported by Google Wallet and similar applications in the future, but some won’t.
Until all merchants accept wireless transactions, you’ll still need to carry your credit and debit cards. In fact, even if a merchant accepts NFC payments, if the technology is a little old, it won’t accept payments from cell phones.
My cell phone’s battery is generally dead by the end of the day. Without a wallet and without a back-up battery, how will you pay for an item with a phone that won’t turn on?

If you’re an early adopter of technology, feel free to jump on the bandwagon. Google Wallet is not quite ready for mass consumption.

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In my wallet, plastic is king. I use my credit card for almost every transaction, though in rare cases I still go for cash. Like many others in this country and around the developed world, I also carry my cell phone around with me everywhere I go. Cell phone technology is progressing quickly, and this year, more phones with payment capabilities will be in the hands of consumers.

New technology allows mobile phones to be used as payment devices. Some vendors, like Starbucks, offer mobile apps that store your credit card information. When you pay for a drink or some other product, you can bring up a bar code that represents your card information. The cashier can scan your phone to accept the payment. This technology is similar to using a credit card, but reduces the need to fumble through a wallet.It depends on the retailer offering an application for your phone, and it may not be compatible with other retailers.

The more exciting technology is near-field communication, an extension of the RFID technology that some credit cards already use. When you have a phone with near-field communication enabled, the device needs to be within four inches of the receiver to complete a contactless transaction. The working distance of eight inches helps to protect the wireless signal from being intercepted, but the risk still exists. With this technology, a nearby reader could activate your payment system without your knowledge.

Furthermore, a stolen cell phone containing any mobile payment technology can be tampered with. A thief could use your phone to pay for items, increasing your credit card bill, much like a thief who steals your wallet might do. Credit card companies won’t hold you liable for charges after a theft of your credit card information, but this isn’t a strong enough reason to use technology without safeguarding against theft.

The mobile carriers AT&T, Verizon Wireless, and T-Mobile have joined forces with Discover to create a mobile payment gateway, Isis, to compete with Visa and Mastercard in this new space. Isis believes this will be a big year for mobile payments, but that depends on the public buying new phones that contain near-field communication technology. The iPhone 5 is said to contain this technology and is rumored to be released in June.

I’m not going to be one of the first to use this new technology. While it’s unlikely for my credit card information to be hijacked, phones are insecure devices. I don’t plan on using contactless technology for payments until I see that more can be done to protect the consumer. I’m usually interested in new technology and enjoy being on the leading edge, but I’d rather be cautious with any technology that makes it easy to spend money and is prone to digital theft or interference.

Do you use mobile payment technology now? Will you buy a phone with and use near-field communication for payments?

Photo: Yutaka Tsutano

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