It was seven months ago that Google, in a full publicity push, announced its Google Wallet -- a tie-up with Sprint, Samsung, and Citibank that augured the end of leather wallets and paper cash.
Or did it?
This morning I bought my newspaper and a coffee with crumpled dollar bills, same as I have for going on a half century. And you know what? I am swiftly becoming a digital wallet skeptic. Maybe, just maybe, it won’t happen in my lifetime.
I did not say that a dozen years ago, when I wrote a gushing magazine piece about how cellphone users in Finland could buy Cokes and candies from vending machines with a wave of a phone. The charges appeared on the buyer’s monthly cellphone bill. In Helsinki, it worked beautifully. (Sorry, link to story not available.)
One thing nagged at me in reporting that story: In interviews, the two major US card issuers, Mastercard and Visa, both expressed interest in the pilots, but neither seemed inclined to believe the technique was coming to the US anytime soon. Merchants weren’t equipped to process such charges; consumers did not understand them; and -- probably the zinger -- nobody was eager to cut carriers in for a slice of the retail action.
Fast forward to today. Near Field Communication (NFC) has replaced Bluetooth and RFID as the linking technology of choice, widely viewed as more secure, reliable, and easy to use. And it’s at the heart of the Google Wallet in the Nexus phone.
Except I don’t own one. And I don’t know anybody who does.
One reason: The concept of a digital wallet is built on a lie. Patrick Gray, president of Charlotte, N.C.-based consulting group Prevoyance, explains: “The argument is you could just carry a phone. Except a phone cannot replace your wallet.” Gray pointed to a driver’s license, or other government-issued ID card, as a must-carry. And nobody in the US is even talking about a digital ID card -- meaning we are stuck with wallets no matter what.
Veteran banker Mike Arman was more dismissive in an email to me: “Digital wallets are stalled because: They aren't convenient. They aren't secure. They don't work very well. They are not accepted everywhere. Plain old cash solves ALL these problems -- cash spends anywhere.”
Try to use a digital wallet -- anything from the Google Wallet to innovative payments tools such as Dwolla and LevelUp -- and it just cannot be guaranteed that you can in fact buy that newspaper and cup of coffee or anything else. For one thing, merchant acceptance is dragging. (LevelUp clams 266 merchants in Boston, a metro center that must have 100,000 merchants or more.)
“A digital wallet is a nice-to-have -- not a must-have,” says Atlanta-based business consultant David Nour. He is not ruling out that someday digital wallets may become must-haves. After all, cellphones, in just the space of a half dozen years, leapt from “nice” to “must.” A boost could come, he says, “if a major ecosystem player really embraced it...”
Cue images of Apple.
In the run-up to last fall’s launch of what turned out to be iPhone 4S (not the iPhone 5 that had been expected), there was huge disappointment in some quarters that the phone did not feature NFC, as had been buzzed about for months. Why? A common belief is that Apple concluded NFC wasn’t worth the hit on battery life, but there is no proof that was the case. All we know is it wasn’t there.
If Apple in fact builds a digital wallet into the next iPhone -- possibly a much-rumored payments tool linked to iTunes -- sign me up. I will buy it on Day 1, and so will millions of us. And the digital wallet will become reality.
But not until Apple says so. In my view, nothing short of a Cupertino kiss will turn this frog into a prince.
— Robert McGarvey has been online and writing about the Internet for nearly 25 years.