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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I'm the founder of Frugal Rules, a Dad, husband and veteran of the financial services industry. I'm passionate about helping people learn from my mistakes so that they can enjoy the freedom that comes from living frugally. I'm also a freelance writer, and regularly contribute to GoBankingRates, Investopedia, Lending Tree and more.


  • The concept sounds really interesting. I would worry most about the security of the system. I’m not sure how easy it would be to steal the information and what information could even be stolen. Once those concerns are laid to rest, I don’t see anything that would deter me from using it.

    • John says:

      I agree Jon, it really is interesting. We have learned a lot about it through some work for our business and retailers seem to really be behind it. I think once the kinks are worked out then I’d be willing to give it more of a try.

  • There has been a lot of news regarding mobile wallets, yet I still haven;t seen one in the shops yet. Not surprising really considering how behind the times Australia is.

    • John says:

      It has not been that prevalent here in the States, but it has been growing. We seem to be behind the times as well in many things, so we’ll see if it actually takes off.

  • Love the idea, hate the practice. At this point, I would never use mobile wallet. Of course, there was a time when I also refused to shop online. Now, I do that too:) I’m just a grumpy old man, I guess.

    • John says:

      I felt the same way Greg. I said I would never buy anything online and now that’s all I do. I wouldn’t say that I would never use it, but think they need to allay the security concerns and promote it better.

  • Hmmm not sure I could ever completely get rid of my wallet, though I agree with you it’s annoying to carry around! I also take it out of my back pocket every time I sit down to avoid back pain (you are pretty much doomed if you sit on your wallet all day every day, not good for your back at all). I do like the idea of moving some things to mobile and paying via a smartphone.

    • John says:

      Oh, I could easily get rid of my wallet. I hate carrying that thing around. I love the idea as well, though my concern would be losing my phone.

  • Not for me, but then again, I’m about 500 years behind the rest of this world in technology stuff, for reasons of stubbornness, mostly. Can’t we all just go back to driving our horses and buggies to the grocer, like normal people??

  • pauline says:

    Sounds very futuristic, although I have seen Japan use it for years, people scan stuff in the underground while waiting for their commute home and it is delivered to their door. I lose too many phones to ever implement that, unless there is a PIN code or some added ID check.

    • John says:

      I agree Pauline. I know it has been used for years in other areas, which does not surprise me one bit. I think it would be beneficial to have some sort of PIN/ID check embedded with it. In fact, I don’t see how it could be successful without one.

  • I have been going back and forth on this issue for some time. I had a Galaxy nexus phone from google that had their wallet feature. You could just put your phone close to the contact point at a register and it would charge your card. That freaks me out. I tried it once and immediately took off my card. I just don’t feel comfortable with it and it seems too easy for scammers to get close enough to you in order to pull numbers with low grade frequency. Not a fan, but I am sure they will figure it out as it goes more mainstream.

    • John says:

      I have as well Grayson, though I really like the possible convenience aspect behind it. Having it done right away does not concern me, it’s the potential for fraudsters to do something that would compromise my information. If they can do it with a simple strip at an ATM or gas station, then I don’t see why someone could not dream up something for a mobile wallet.

  • My Financial Independence Journey says:

    Sounds interesting, but I’ll stick to credit cards for now. I have no desire to be an early adopter for a payment processing system. I’ll happily wait a decade for the kinks to get worked out and other people to lose money through fraud or systems “features”.

    • John says:

      It is interesting MFIJ, and I think you hit on a point with being an early adopter of it. The big companies want to do it, but no one wants to be the first big player on the market with it.

  • Mackenzie says:

    I’m old school, mobile wallet is not for me. I’m not a technology person; I’m lucky I can figure out my blog 😉

  • I’ve only seen people use that so far in our city to pay at Starbucks. I too would be concerned about the security aspects of it. Heck I won’t even log on to things on my tablet or laptop using WiFi due to security reasons.

    • John says:

      I have seen a bit of that as well at Starbucks. I agree, that the security aspects can be concerning. I don’t log in to financial stuff using WiFi either and I think that’ll hold back many.

  • I love the convenience, but like you and many others – I need to be confident in its security. I watch enough TV (which, of course is 100% realistic!) and seen too many bad guys clone phones. 🙂 At the same time once they figure out how to make secure, I would seriously consider using it. I certainly wouldn’t mind lightening my purse!

    • John says:

      I love the convenience aspect as well Shannon, but agree that the security aspect is concerning. If they’re able to make it secure then I’ll gladly do it.

  • I don’t use the mobile wallet per se but we have our starbucks card on our phones and it helps tremendously. We don’t have to fumble through wallets or purses anymore.

    • John says:

      I’ve seen a few of those as well and think they’re pretty neat. I does not surprise me one bit that a company like Starbucks is ahead of the curve in this.

  • Sounds interesting and it’s probably going to be one of those things that eventually we will probably have no choice to use (other than cash)…well who knows. But yeah I think my main concern right now would be security.

  • Jim says:

    I have heard of this before, but my concern is a relying so much on technology. I hate to put myself in that situation. I know I could have it both ways if I wanted to try it, there is something more appealing about knowing the people I bank with. I am sure this will be the norm in about 5 years or so, though!

    • John says:

      I agree Jim, I do like that feeling of knowing who I am banking with, but I think this technology is ultimately inevitable. I LOVE the convenience aspect of it, but the security does leave some concerns.

  • Justin says:

    This is something that kind of scares me. I’m not a technophobe, but when it comes to money I prefer something tangible.
    Plus I wonder how this will affect people’s spending habits. Research shows that people are worse shoppers with cards. I wonder how this will change if it’s with phones.

    • John says:

      That’s a great point Justin and one that should be considered. Of course, this is not something most retailers would be concerned about, but is something that warrants thought.

  • Seems like, as you point out, it isn’t implemented widely enough for it to be very successful or effective. Perhaps that will change, and it sounds great otherwise.

    • John says:

      I think us seeing it here in the States is only a matter of time. I love the convenience aspect, but there are some valid concerns.

  • I am in love with the idea. I wouldn’t call myself an early adopter but I will be in the mobile payment game before its common practice – which I believe it will be. The security kinks will eventually get worked out. Convenience is a game changer. The evolution of online shopping proved that. I will still carry a purse though. It completes my outfit. 🙂

    • John says:

      I agree Diane, convenience is a game changer. You also bring up a great point that the security kinks will be worked out. I think the big thing is that few want to be first to the market with it. But, that said, once we do see it then I think it will become more prominent and I’ll be using it myself. Thanks for stopping by! 🙂

  • I´m mostly worried about the security. and besides, I like having my wallet with me.. because what would I do if my phone got stolen, and with it my “wallet”? I prefer somethings to be kept separate.

    • John says:

      That is a valid concern and one that many have. I always have my phone with me and if it were to get stolen it would be problematic, which is why they need to have strong security protocols in place. Thanks for stopping by! 🙂

  • Jose says:

    I hate to sound anachronistic but the entire concept of a mobile wallet scares the crap out of me. I have come to accept and trust paypal (even though I don’t like ebay) but when it comes to anything in the “cloud”, it’s not a matter of if but when they will be compromised by hackers!

    • John says:

      You’re definitely not alone Jose! I actually like the idea and once they get the security concerns addressed I’ll have no issue with using it…convenience trumps it for me.

  • Love the concept of it, and having worked in the field, I’ve seen the the products grow leaps and bounds over the last few years.
    Im still not sure if I’m okay with my info that easily accessible.

    • John says:

      I agree Marissa, I love the concept of it and it has grown over the years. The ease of accessibility is concerning, but convenience trumps it in the end for me.

  • I am a little late on this response but I love the idea but definitely share the same concerns as the others. I think the least of my concern though would be the reception part. I do not mind washing dishes, lol. Plus if you cannot get reception, who knows, maybe it gives you a little more time to contemplate whether or not you really need that item you are about to purchase.

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