One of the big business headlines this week was that Canadian banks are set to unveil a system to allow us to buy stuff directly from our smartphones. Apparently, we in Canada are way behind, with folks in Asia already using phones at point of purchase.
While I still anticipate exactly how it will work, I suspect it will be a money revolution along the lines of the introduction of debit. Back when I was a kid, my mom used to write cheques at the grocery store, back in the days before bar codes. My kids will grow up possibly seeing me and my debit card as a quaint memory.
The Integrated Approach
Already, thanks to smartphone apps, you can organize your finances quite effectively through your phone. All the major Canadian banks have apps that allow you to keep track of your balance and make payments. This is pretty handy when you’re about to make a big purchase and want to know if you have enough money in your account. Through apps like Mint.com, you can integrate the tracking of your accounts, investments and bills and use alerts to make sure you never miss a payment.
The upshot of what we have know is we can get a look at our financial situation at any time. And since we often have downtime when we’re out – while waiting in a line or taking transit – the current financial capabilities of smartphones help us keep our financial responsibilities top of mind.
The Early Adopters
Already, the so-called digital wallet is making an appearance. Google Wallet allows you to pay for things by tapping your phone on a payment pad at some retailers – according to the app, it is accepted anywhere with MasterCard PayPass. The back end, however, is a bit more complex. Transactions are funded either through a Citi MasterCard or by putting money on a Google Prepaid Card through one of your existing credit cards.
Both Visa and PayPal are working on mobile apps to allow point of purchase buying. But what will actually bring this to the mainstream is the proposed plan by Canadian banks to set up a system to allow us to scan our phones at the checkout and have money come right out of our bank accounts like it does with a debit card. There will be a PIN or some kind of security system in place, possibly one that’s more rigorous for larger purchases.
Of course, this isn’t that much more convenient than a debit card — you have to keep both of them on you and pull them out when you buy. But a phone will allow you to see your balance, store your receipt electronically (I will not miss those strips of white paper clogging up the bottom of all my reusable shopping bags, that’s for sure), and they can be easily retrieved come tax time or when you want to make a return.
Cutting Out Cards
The possibilities for mobile appear to be pretty extensive. The future of smartphones sees us using them not just to buy things, but to prove our identity and replace the stack of cards in your wallet today. Things like health cards, transit passes, rewards cards, gift cards and more may one day be stored electronically.
While security will surely be a huge issue when we’ve stored much of our ID and financial information on our phones, there are some huge benefits. No more forgetting your library card at home or running out of change at Tim Horton’s. No more waiting for your new driver’s license to appear in the mail after you’ve got your new picture taken. Even if your phone gets lost or stolen, in theory you can rely on electronic back-ups to replace your lost items and place electronic security on the stolen versions.
The true digital wallet may be a pending concept, but it’s not that far off. Within the next year, consumers can expect things to change – and for smartphones to get a whole lot smarter.