JBS Group, Business Advisory Services

Friday, December 10, 2010

Do I Really Want My Wallet In My Phone?

For as long as there have been mobile phones the mobile phone manufacturers and the mobile phone service providers, operators, have been seeking ways to increase their revenues. First it was voice, then it was SMS, then it was ringtones, then WAP and now it is data. But what would be next? Financial transactions. The dream revenue stream. Billions of transactions conducted with mobile handsets and the mobile operators taking a little piece of every one of those transactions. Wow. No longer limited to petty fees for voice, SMS and data. The handset manufacturers drooling at the prospect of selling hundreds of millions of new mobile handsets to everyone who now felt the compelling need to be able to have their wallet in their phone.

So the PR campaign began. Subtle messaging describing the convenience of having your wallet in your phone. Why carry a physical wallet, an mp3 player and your phone? How uncomfortable and inconvenient. Why not carry all of that in one smart and cool device? Little by little the push gained steam in the tech world, investment universe and the media until no one could imagine that normal people might not want their wallets in their phones. The hew and cry was heard, “I want everything in one little device”. “I only want to carry one device, my phone”.

But the question is, does everyone feel this way? Do people really want their wallet electronically in their phone? Do some people want their wallet electronically in a different device? Do some people want their wallet in their wallet?

Obviously the PR campaign will now intensify with the introduction of the Google/Samsung Android NFC enabled phone. Over the course of the next 12 months a number of new handsets with NFC will appear in the European and North American markets. Mobile operators will finally attempt to work out their differences with the card issuing banks, credit card organizations and merchants. Visa, MasterCard, First Data and a few others will introduce their feeble attempts at making existing handsets into wallets with microSD cards, shells and stickers.

But the real test will be with the public.

Will the normal person on the street want their wallet in their phone? Will they purchase a new phone to be able to do this? Are criminals just drooling over the prospect of millions of insecure phone-wallets proliferated all over the place?

The answers are this.
No, the normal person on the street doesn’t care about this at all. Many will be convinced by good advertising and a mobile operator sales person that this is going to change their lives so they will buy the new phone. Criminals are already preparing programs to hack wallet-phones and steal PIN codes. PIN code hacking programs are inexpensive and easily available for laptops so they will be quite easy to port to phones. And the payoff will be great.

Slowly but surely people will use electronic wallet-devices and within ten years they will be commonplace. But not everyone wants their wallet in their mobile phone no matter what the vested interests and their PR merchants push. Some people will want their electronic wallet in a portable multimedia player, some in a little keyfob, some in their watch and some in a dedicated little wallet device. Of course the majority of people will still want their wallet in their wallet. Certain merchants, banks and venues will want to issue their own branded electronic wallet-ticket devices. Added services, convenience and security are key to acceptance. As soon as electronic wallet-phones with PIN codes are hacked en mass there will be attempts made to secure the existing NFC handsets with optical biometrics using the phone’s camera and other exotic security methods. Some mobile operators will demand fingerprint sensors now be installed on every new electronic wallet-phone by the handset manufacturers.

The future is golden for electronic transactions. But the future is a great deal more diverse than the mobile phone handset manufacturers and mobile operators would have you believe.

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