What is Mobile Wallet and is it Worth the Risk?
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Whenever Mrs. Frugal Rules and I go somewhere, one of the last things I do before we head out the door is slip my wallet into her purse. I can’t stand riding around with my wallet in my back pocket, especially when my smartphone is filling up my front one! Besides, with three little ones to take care of, she carries around a ginormous purse so there’s more than enough room in there for my wallet. That’s why the idea of mobile payment intrigues me. Just imagine not having to carry around a wallet at all and being able to use my phone to bank, search, text, call people and make payments. I like that. But, what concerns me is what concerns most consumers, at least from some of the research I’ve seen – I don’t know if I can trust that my personal financial information and bank account data will be kept safe if I start paying for things with my smartphone.
What is Mobile Wallet?
Mobile wallet is exactly what it sounds like. It’s a way to pay for goods and services through your smartphone. It’s another form of cashless payment, like credit cards and checks except different in that its all done through a smartphone. It’s actually widely used around the world, especially in developing countries where there are a higher percentage of unbanked or underbanked individuals. If you didn’t have a bank account or credit cards, you’d probably be more interested in mobile payments than you are now. That’s actually part of what keeps mobile wallet usage down in America, Canada and Europe – we’re engrained in a credit card system that while complex on the back end, works very simply, seamlessly and efficiently for consumers now.
Who wants it?
According to research commissioned by First Data, interest in mobile payment solutions is increasing among consumers. People are looking for a seamless shopping experience where they can start a purchase online and finish it in store or use their phones to pay for in-store purchases. Just over half of American consumers use their smartphones to make purchases now, 49% have heard of mobile wallet and 28% are interested in using it. Those most interested in it tend to be younger people and those who already bank online. Merchants are interested in it too and they actually tend to overestimate consumer interest in mobile wallet. It seems like everyone is just waiting for someone to come up with a mobile wallet solution that’s reliable and safe.
What are the risks?
Some of the risks associated with smartphone payments include technology concerns – what if I can’t get reception at the spot I want to pay for my dinner, groceries or gas? But, most of the concerns around mobile wallet have to do with security. People are concerned, like me, that their payment information could be stolen. According to First Data’s research again, 72% of consumers asked worry that their payment information could be stolen and 77% said they are concerned about the security of mobile payments. Almost 60% worry that they might lose their phones and 40% fear weak signal strength when they need strong signals to make payments. Last year, rumors swirled that Apple would release a mobile wallet solution with the iPhone 5 but nothing came. People are looking to Google, Apple, PayPal and Square Wallet for a mobile payment solution that can become mainstream. Mrs. Frugal Rules and I tried out a local vineyard’s tasting room on a date recently through a Living Social deal we purchased. I noticed that the vineyard used Square to process our payment; we signed on an iPad and had our receipt emailed to us. It was convenient, easy and totally safe. If more mobile wallet purchases can be like that, I just might leave my wallet at home on our next date. What is your opinion on mobile wallet? Would you use it? What concerns do you have about it?
Photo courtesy of: Phil Roeder
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