Can your smartphone replace your wallet?

Take a look at all those credit and debit cards in your wallet. Add in your loyalty cards and memberships. What if I told you that you could throw that pile of plastic away and replace it all with a single device which you already carry with you everywhere you go?

Not only that, but your smartphone is also capable of providing you with far greater security in your transactions. It’s about time we ditched our overstuffed wallets and took yet more delight in our smartphones.

Mobile wallets have arrived
We have banking apps now that let you check your balance, make and receive payments, and even scan in checks for deposit. You can use PayPal, Google Wallet, or Apple Passbook to buy goods or tickets. In some of their stores, Starbucks lets people pay for their vanilla soy lattes by scanning a QR code from their smartphone. In some cities, you can pay for bus tickets or parking meters using your smartphone. And it’s no surprise that credit card companies Visa and MasterCard are working on mobile payment systems.

Whether it’s based on near-field communications (NFC), QR codes, or a PIN-protected digital wallet in the cloud, the age of mobile payments is no longer a pipe dream.

According to a survey of 200 mobile industry insiders conducted by Chetan Sharma Consulting, mobile payments will be the breakthrough category of 2013 and mobile payments and commerce apps will be among the most popular applications of the year, second only to social media. A recent IDC report is suggesting that mobile payments will be worth $1 trillion by 2017.

What about security?
The biggest barrier to the adoption of mobile payment solutions seems to be security concerns. People are nervous about storing certain information on their smartphones. In fact, recent research from Harris Interactive found that 51 percent of people surveyed did not want to store sensitive information on their phone and 40 percent don’t want to transmit sensitive information to a merchant’s device. This is despite the fact that 66 percent of respondents expect mobile payments to replace payment card transactions.

Alleviating security concerns and proving that mobile payments can actually be safer than traditional plastic is a real challenge for the industry. It will take some innovative thinking, but it is far from insurmountable.

The key is to introduce multiple layers of security that bind together to create a system that is virtually tamper-proof. The trick is to achieve a level of air-tight security without creating a horrible user experience. Convenience and security need not be mutually exclusive.

Tired but true: ‘create a positive user experience’
Who wouldn’t agree that everyone today is plain sick of passwords and usernames? Remembering your login details for a wide variety of sites and services is a pain. Many people end up using generic passwords or writing them down and both actions can be a real threat to the security that passwords offer in the first place. We need a new system that is easier for people to manage. Something that offers multi-layer authentication and the potential for interoperability across devices, so people can make payments using their smartphone or tablet.

Imagine a system that authenticates your device and authenticates you before rubber stamping a transaction. That would instantly offer greater security than a traditional credit card, and the beauty is that it doesn’t have to be laborious for the user. There are better ways of identifying individuals than through the use of passwords or PINs.

When it comes to authentication, there’s proof in your pocket: The average smartphone contains personal identifiers that are every bit as unique as a fingerprint, and much more secure when properly encrypted, such as your private music collection. Combinations of authentication factors that have been created by you are capable of guaranteeing a high level of security from digital identity theft.

The all-important confidence factor
There’s no denying that the mobile payments landscape as it currently stands is fragmented. There are lots of competing services and technologies with no clear frontrunner. The right security solution could be the catalyst that’s needed to pull it all together and build that all-important consumer confidence.

If the prospect of mobile payments can combine security and convenience then we can reasonably expect people to adopt it. Your smartphone can replace your wallet and it will replace your wallet. The only real question is how to make that happen quickly and securely. 


Harlan Hutson

Harlan Hutson is president of Acuity Systems, developers of TraitWareID, a mobile authentication app that links the identity of users with certain personality traits of their devices, then ties the device and user with an Identity Binding Token. The IBT can act as a virtual token, or proxy for the authenticated end user in any transaction. For more information please visit