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A Mobile Wallet: Cash, Credit, Or ... Cellphone?


Imagine walking into Jamba Juice for your favorite smoothie fix, and when it's time to pay, instead of pulling out cash or a credit card, you just tap your phone on a reader, and you're ready to go. Better yet, when you tapped your phone to pay it, it also redeems an electronic coupon stored in your phone, so you end up paying even less. Yeah. Well, people in fact can already do this at Jamba Juice using Google Wallet on certain Android phones. You can use it at Macy's, Bloomingdales, Duane Reade.

We're not doing a commercial here. We're just telling you that it's spreading. The list is going on. And AT&T, Verizon, T-Mobile, they've all teamed up to launch their own version of something called the mobile wallet. It's going to be finding its place everywhere later this year. But how safe is my banking information stored in my mobile wallet, and what's going on in it for - and what's in it for me besides the coupons? Here to talk about it is Gilles Ubaghs. He is lead analyst for cards and payments at Datamonitor in London. Welcome to SCIENCE FRIDAY.

GILLES UBAGHS: Hi there, Ira. Thanks for having me.

FLATOW: How ubiquitous is this now?

UBAGHS: It's still very, very early days and still (unintelligible) nascent phase of development. What you're seeing at the moment now is, you know, it's been years in the making. This is something - people have been talking about this sort of technology for at least 10, 15 years now, but it's only now that it's really starting to finally hit the market. But even then, it's not quite the big bang that many people are hoping. It's slowly creeping out. Where these things are actually rolling out now, it tends to be focused much more on big urban centers. And even there, you know, the U.S. is much more advanced than quite a few other countries are, at least compared to Europe. You need to look a little bit further afield at countries like Japan and South Korea to see really what that kind of environment really exist like once it's been in place for a few years.

FLATOW: And what is the benefit for me as a consumer in doing this?

UBAGHS: Well, this is, you know, that's a big question. That's a, you know (unintelligible). I'm not 100 percent, you know, sure that anyone has actually answered that quite yet. It's, you know, it's - the key thing that, you know, everyone will keep saying in the industry is (unintelligible) convenience. You know, there's this weird notion – we can factor(ph) that people love the mobiles phones, and they have to make payments, so they'll love using the mobile phones to make payments. I don't think the connection is necessarily that one to one.

Now, where it does become more interesting is exactly what, you know, Google is doing. I think very much the big attraction is when you can add in that extra functionality like, you know, these handsets, these cell phones which everyone has, they're becoming increasingly powerful. It's not just about making the payments anymore. It's when you can suddenly start tying that into your location, you know, and (unintelligible) programs you may have. It could even be identification, kind of access control. And, you know, it all starts tying together. It all starts becoming very personalized.

FLATOW: Yeah. If you take this to the next step, why do you even need the checkout counter at all? Why can't you just take your can of peas, put your cell phone on, it takes a picture of the barcode, and you pay for it right there? You walk out of the store.

UBAGHS: Yeah, it's funny you say that. Apple has actually released something like this quite recently. They released – they have an Apple app store app, you know, for the iPhone which you can - they're started trialing in a few cities. Its service - it doesn't use the actually NFC contactless chip. But what you can do is you can actually go into the store, take a photo, you scan the barcode, and you can pay for it right then and there, you know, using your iTunes account and that's it. You walk out. You get your receipt emailed to you. I don't actually know how the security works on that. I don't know how they stop, you know, shoplifters from just walking off with everything under the sun.

But I do know, you know, they'll have certain parameters in there to stop people from, you know, walking off with laptops, which you need, you know, someone from the shop to actually help with you those. But, you know, if you just wanted to buy a pair of headphones, you can do that. That actually exists today.

FLATOW: Is this - is all that information on our phones safe? I mean safe for us, for we consumers.

UBAGHS: Actually, it surprisingly is quite safe. The real focus - the contact list (unintelligible) side of things, something called the NFC chip, that stands for Near Field Communications. Now, what that chip does, it sits separate. It's its own little chip within the handset, which it's very, very secure. That's why it becomes suitable to use for things like payments, and it extends quite, you know, a bit further than that. I just read today those - the big airport technology cell phone providers (unintelligible) has been trialing a proof of concept for NFC mobile contact list ticketing, you know, bagless check-in, boarding and even lounge access.

FLATOW: Mm-hmm. I guess here's a tweet that came in. Somebody wants to know what happens when you lose your phone and it's got all that information in the phone, your bank account and all that kind of stuff. Is there a security risk there?

UBAGHS: There is. I mean, there's always is, right? I mean, if you carry a wallet, that's a security risk as well. You can drop it on the bus. It can fall out anywhere. The big difference is, you know, with this, with the handset you can switch it off, you know. It's - what a lot of handsets can do now, what I would actually recommend to most of your listeners, you know, make sure you do have a PIN that you can actually put on (unintelligible) you know, to open the whole thing.

You know, but a really interesting statistic is, you know, the average amount of time it takes someone to realize they've lost their wallet is something like five or six hours. It takes people about 15 minutes to realize their phone is missing.

FLATOW: That is better. Yeah.



FLATOW: Then the panic sits in.

UBAGHS: Yeah. Exactly.

FLATOW: Panic (unintelligible) so what is the future? So this is - so the mobile wallet, basically we just sit back and wait for it to hit us.

UBAGHS: Well, it's - I think what you're going to see happening now is you're going to see a lot of products launching over the next few years. But the actual, you know, the market, how it's going to work, that's not settled yet. You know, I think (unintelligible) the user actual, you know, experience, how it actually works, you know, what - how many buttons you need to push to actually switch the thing on, I think it still has a long way to go. It could happen very quickly. I mean, if Apple launches something very slick in the next six months, you know, I could picture everything - everyone imitating that very quickly. But I think it's going to be more of a slow burn, you know? There's a lot of breathless estimations that, you know, the wallet is going to be obsolete; you know, 10, 15 years from now, no one will be carrying a wallet.

But if you look at it this way, you know, people still wear wristwatches, you know? It's not quite ready yet. I don't know if consumers will be ever be ready to just fully abandon, you know, more traditional means.

FLATOW: Yeah. We said that about green cash when the credit cards came in, and there's still a little bit of that lying around.

UBAGHS: Yeah. Exactly.

FLATOW: All right. Thank you, Gilles.

UBAGHS: Yup. No problem.

FLATOW: Gilles Ubaghs is lead analyst for cards and payments at Datamonitor in London. Transcript provided by NPR, Copyright NPR.