Smartphone makers taking aim at the billfold, but will consumers take the step?

via Smartphone makers taking aim at the billfold, but will consumers take the step? on clarionledger.com, 9/10/2014.

Remember the fat-wallet problem which exploded in the 1980s? There was even a Seinfeld episode about it, in which George developed back problems from his massive wallet. In the 80s and 90’s, men’s wallets were becoming so overstuffed with things like membership cards, credit cards and cash that back problems were increasingly surfacing. There is actually a condition (Piriformis Syndrome) that can be agitated by carrying an overstuffed billfold.

Previously, the billfold had been a way to carry cash, and maybe your driver’s license and a photo or two. But over the years, as we were expected to carry more and more pieces of plastic and paper, the contents of our wallets began to outstrip their capacity. Pretty soon, many guys’ wallets were so massive they threatened to need their own zip codes.

But help began arriving with the advent of the first smartphones. Suddenly, we could carry dozens – then thousands — of photos around with us, and we could also consolidate our gym membership cards and store discount cards with us without any actual plastic. Wallets began to shrink again. One feature remained elusive, however: paying from your phone, or true mobile commerce.

It’s simple, really; a smartphone can incorporate something called “Near-Field Communication”, or NFC. NFC allows your smartphone to interact with a NFC-enabled terminal, communicating with each other via radio waves when they’re brought into close proximity to each other. The customer only has to bring the device within a couple of inches of the terminal, and then approve the transaction using a pre-established link to their bank or credit card company.

While the notion of paying for things with your phone has been around for several years, most American consumers haven’t had the technology available on their smartphones. Some merchants have field-tested the technology; for example, Citibank has had a NFC-enabled Mastercard for a few years. And Google’s Wallet product, although promising, has never really taken off, some say due to a lack of infrastructure. There just hasn’t been a critical mass of phones and terminals to make it work on a wide scale.

But on Tuesday, the elephant stepped into the room. Mega-innovator Apple, Inc. announced their entry into the mobile payments market on its upcoming iPhone 6 and iWatch. Apple has been reported to having quietly been installing NFC technology in its stores, using innovative security features to encrypt data. ApplePay will be built into the new devices.

So, suddenly the game has changed. But, will consumers adopt it? Intriguingly, a survey from Creditcards.com indicates it might be a hard sell. Almost half of consumers surveyed said they would not use it, but it’s still early in the game.

Consumers are wary of the never-ending stream of security breaches, affecting retailers across the globe. Security is top in the minds of many, and any new payment technology would have to reassure them that it’s secure. Also, nearly two-thirds of people 65 and over said they wouldn’t adopt it.

As with the adoption of any new technology, most people are waiting to see if paying by mobile phones will take off. If Apple’s previous successes are any indication, the billfold’s days may indeed be numbered.

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