Digital Transactions Authoritative, insightful and timely information for payments professionals
By Nicole Chan
When Apple Pay first entered the digital-wallet scene, consumer interest in the technology increased. Now the question is, will digital-wallet payments become universal? The short answer is yes. The three reasons below expand on why.
Reason #1: The technology exists.
Rarely has the developed world made a technological discovery that was accessible to the average household and that failed to become commonplace. There may be a delay in adoption among certain populations, but history has shown that eventually most people adjust to the new way of doing things. Take, for instance, indoor plumbing, telephones, automobiles, the Internet, digital-music downloads, and cellular phones.
Once inventions become accepted as the norm, advances in technology within those inventions evolve over time. More automobiles have automatic transmissions, power windows, and remote-controlled door locks. Cellular phones shifted from being used primarily to make phone calls to text messaging, GPS maps, and Internet access. Now they’re also being used for financial transactions, due to near-field communication (NFC) technology.
Reason #2: It’s convenient.
Smart phones are the norm, making all the tools and apps on a smart phone conveniently accessible in one handheld device. Consumers have them on hand and in hand everywhere they go. It’s the source of communication, Internet access, directions, photographs, social media, videos, music, games, and banking. Since the technology exists and consumers already have their phones in hand, it only makes sense to eliminate one more thing to carry by having a digital wallet instead of credit cards. One less thing to keep up with means one less thing to lose. Smart phones are the universal remote control of life.
Reason #3: Security calls for it.
In the wake of security breaches at big names like Target and Home Depot, consumer security is at the forefront of everyone’s mind. While late adopters may argue that digital wallets are less secure, there are a couple of products that refute those arguments. First, the EMV deadline means that credit card companies and banks are issuing more secure chip cards through the fall of 2015 and beyond. The NFC technology necessary for point-of-sale systems to perform contactless EMV transactions is the same technology necessary for digital wallets.
But the primary reason digital wallets are a step toward greater security is their ability to acquire biometric authentication. A smart phone that denies access to private information without a fingerprint scan or retina scan is a device that’s worthless to would-be thieves. Add point-to-point encryption to the tokenization that digital wallets already offer and the security barricades just grow thicker.
Tokenization through NFC connections and biometric identification places privacy and security in the hands of the consumer… literally. Consumers will no longer have to trust that a company will keep their important personal information secure. Retailers won’t store the private information because digital wallets will render the data storage unnecessary.
Technology that’s convenient and more secure, who doesn’t want in on that? The day is coming when people will carry everything on their phone, including their wallets.
—Nicole Chan is director of public relations and brand marketing at Bindo Labs Inc., New York, N.Y., a tablet-based point-of-sale terminal maker.
