All You Need to Know about Mobile Wallets: What the Future of Payments Looks Like

Your wallet is full of credit cards, debit cards, cash and even more cards. That makes you a walking bank for the average criminal, a stolen identity waiting to happen. What’s the solution? Stop carrying physical cards, and consider a mobile wallet to hold your money.

Mobile wallets use near-field communication (NFC) chips inside mobile smart phones and tablets to transmit payment information. When a customer is ready to pay using a mobile wallet, they open an app on their smart phone or other device. – Chase Paymentech

This means never having a stack of cards in your purse, and only needing to have your smartphone handy when making purchases. But if you’re like the majority of consumers, you’re not sold on the newfangled idea of mobile payments on the go. How does it work? Does it work everywhere?

Mobile wallets have actually been around for years, since 2006’s Nokia 6131 in fact. You might even be surprised to know that the Starbucks app you use is considered a mobile wallet. Grocery store loyalty cards, gift certificates, coupons rolled into apps… all forms of virtual wallet technology. Still, according to Mobile Payments Today, though 61 percent of consumers have heard of them, only 11 percent of Americans have ever used a mobile wallet.

Times are changing though, and mobile payments are becoming all the rage. Here are the main contestants in our book.

Google Wallet: Shop. Save. Pay. With your phone.

Google Wallet

Shop and save in stores with all your loyalty and offers in one place. Send money to friends and family and they can spend it instantly with the Google Wallet Card.” Google Wallet (@googlewallet) was pretty much the only one in the game when it came out over 3 years ago. With it, you can carry your cards virtually, use Google offers, send money to anyone in the US with an email address, and make payments with a wave of your phone.

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On top of that, Google Wallet comes with 24/7 fraud monitoring–if your physical card(s) are ever stolen or lost, it can be disabled right from your phone.

Isis Mobile Wallet from AT&T

isis

“Pay for purchases by adding participating credit cards from American Express, Chase®, or Wells Fargo® to your Wallet or by setting up an American Express Serve® Account that you can add money to with your preferred credit card, debit card or U.S. bank account.”

Isis (@PayWithIsis) is a new player and has been doing pretty well lately. Created by AT&T, T-Mobile and Verizon (the latter two had blocked the use of Google Wallet on their phones), the app’s independence from any major financial institution probably explains why it’s been so successful. How successful? They’ve claimed 20,000 new Isis wallets per day.

Been to a Jamba Juice recently? Layered in Isis signage, Jamba Juice has a deal with Isis: Until they reach a million smoothies, customers paying with Isis get one free smoothie per day. And that’s just the tip of the iceberg–there are also deals with Aeropostale, Toys R US, and Coca Cola. It might even be more secure than Google Wallet because Isis is PIN protected. And if your smartphone is ever lost or stolen, you can freeze your entire wallet remotely.

Hold On, Where Do These Work?

Wave

Before I dive into the next wallet, you’re probably still wondering if mobile payments work everywhere. And how? Dig out your debit or credit card, and look for a little wave symbol on the front. If you have it, you’ve probably already been making virtual payments, just under a different name: Visa payWave. But you probably know already that not every store you go to has a wave-ready payment system, and you still have to swipe.

As Isis and all mobile wallets are still gaining ground, you’ll often still need to carry a card around with you for purchases. Recently, while at AT&T upgrading my phone plan and getting set up with Isis, I was told by a sales rep that each SmartTap payment terminal, those used for Isis, cost merchants thousands of dollars to install. It’s no wonder why they’re few and far between.

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Loop: The Smarter, Safer Wallet.

Loop

Loop (@looppay) has hopes of changing the need for fancy terminals with its attachment to the smartphone (called a “fob”), which relays a magnetic signal to the merchant’s point of sale terminal. Think along the lines of Square, the mobile payment tool popular with iUsers. Apparently, the fob works with 90 percent of terminals where you’d usually swipe your card. However, the attachment costs about $39, and the practicality of carrying it around, without losing it, is a challenge to consumer behavior that may not be easy to change.

More important than lugging a little fob around though, is the fact that all of your financial data is stored on that fob, completely unprotected if lost. Not good at all.

Will you make the change to mobile?

Mobile wallets may not be an option for you, especially if you live in a small town or are with a small, local bank. But if you’re in a major city, or if you frequent popular stores and restaurants with wave terminals, are you willing to make the switch? Is doing the smartphone tap dance easier than entering a pin number or carrying around a credit card or two?

Check out user reviews in our credit card section. You may already be able to make mobile payments from your smartphone!

Asking people to change an old habit—carrying credit cards and/or cash in their pocket or purse—is never easy to do. No matter how secure mobile wallets seem, consumers are still wary of putting their financial information in apps and waving it around at a register.

Hard to believe, yes, but there was a time when people didn’t trust credit and debt card payments (and for good reason, if the security breaches are any indication). There are still people who write checks at the grocery store, rather than use the card that came along with their checkbook. But while mobile wallets are still new, and rather befuddling to most folks, they appear to be the new, shiny toy.

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If getting cash-back rewards for signing up for a credit card is right up your alley, then why not get $50 for trying out Isis’ American Express Serve prepaid card? If you’re already having your Starbucks app scanned for your morning latte, why not discover the other ways you can use mobile payments? Companies are practically throwing money and discounts at mobile wallet users nowadays.

The future of mobile wallets remains to be seen, but with many changes on the horizon, it may be just a matter of time until everyone jumps on the mobile wallet bandwagon.


  • Great article Brenda. I really want to love virtual wallets, but as long as I get charged a fee (2.7% per wave Google Wallet) for using them, I’m going to stick with old school credit cards. I want to earn money with every purchase, not the other way round.

    • Cody Culver

      You are not charged 2.7% “per wave” on Google Gallet. The only fee that there is with Google Wallet is the 2.7% fee for loading your wallet balance with a credit or debit card (Which I think is what you were thinking of). You can however negate that fee by just adding money through your bank account.

  • Audrey Henderson

    The US is actually behind the curve as far as mobile wallets go. Folks in places like Finland have been paying for things with their phones for years.

    I agree with Andrew — you’ve unearthed lots of interesting info here, good stuff. But paying to use a virtual wallet is like paying to withdraw (your own) money from an ATM. Not gonna happen if I can help it.