It’s said that the world changes radically in 1 fell swoop. Mobile phones, television, radio; inventions always alter global environment. A digital wallet, too, is an indication of our forever advancing world. It wouldn’t be wrong to say that while its use is still dawning on the horizon, it may soon affect utility of cash & ATM cards.
Near Field Communication (NFC) is a term you’re going to be hearing a lot, going ahead. For the uninitiated, it’s essentially a secure magnetic communication field which operates in close proximity between devices, no more than a few centimeters in radius (much like bluetooth). Smartphones, equipped with NFC chips, are matched to nearby point-of-sale (POS) systems at participating merchant locations, so that payments can be processed without the need to whip out the plastic.
Owing to the buzz surrounding NFC, roll-outs are planned in almost every country around the globe. NFC is one of the key technologies powering the digital wallet explosion worldwide & lots of top-tier companies are extremely keen to foster & expand the technology as quickly as possible.
Digital wallets like Google Wallet eliminates the need to carry a traditional wallet around in order to do your shopping both physically or Online. The virtual wallet replaces a credit or debit card in that it securely stores your financial information, either on device or on servers provided by wallets’ company.
Generally, these NFC Payment apps are free & can be downloaded from device specific app stores. Once acquired, users may enter their details into the digital wallet, such as banking credentials, shipping addresses & so on. Now, when shopping Online, instead of having to enter personal information into every form presented for completion on a shopping Website, all that needs to be done is use the information stored on app to fill out all fields.
Also, there’s no need to add sensitive card data which has always presented a risk for Online users. The procedure reduces a previously daunting process to an effortless experience, making Online shopping a 1-click affair. Similarly, physical shopping becomes much smoother once in possession of a digital wallet. Simply tap your smartphone at the point-of-sale, perhaps add a PIN & you’re good to go, shiny new purchases in tow.
With digital payment transactions expected to rise to 726 billion transactions by 2020, all the “big name” Internet & smartphone development companies seem set to enter the race in a neck-&-neck effort to get the largest share of this lucrative business.
Google Wallet
Google Wallet relies on NFC. The salient fact of this digital wallet is that if a merchant does not have an NFC enabled checkout cashier system installed, Google wallet will not be accepted as a payment method. This is why there is such a push to make merchants compliant. In the most populace countries like China & India there has been a huge swap to digital payment apps like Google Wallet.
For India, in particular, a digital wallet has all but replaced cash as a payment option following the demonization exercise in 2016 as a way to combat terrorism & illicit black market cash. The Chinese market is presently dominated by apps which use systems other than NFC, such as AliPay & WeChat, both of which use QR scan codes to perform their payments. Alipay boasts 520 million Chinese users, so it’s a sizeable competition to NFC operators.
Apple Pay
Apple devices such as Apple Watch, iPad & iPhone are also NFC compliant. Like Google Wallet, Apple Pay is device specific, in other words it can only be used via Apple devices. With Apple Pay, the user does not need to download a particular app to use the system, the device uses information already stored on an Apple ID account, the exact details used to buy apps, music & videos via iTunes or the Apple App Store.
Visa, Mastercard & PayPal
Both Visa & Mastercard have wallets vying for support. Visa’s offering is known as Visa PayWave, while Mastercard’s is called PayPass. Both offer secure cashless payment options connected to their specific banks. They offer all the security features users have come to rely on when using big banking services. Data in-app is tokenized for added security so no actual banking details are shared on payment. PayPal has teamed with Mastercard to offer NFC payment options for their 250 million strong user-base.
Most countries have their own versions of these services like Square Pay in the US or ICICI Pockets in India. There are far too many to mention, but they all perform similar cashless functions.
A war is being fought on the frontier of digital wallets. The victor cannot be predicted, only speculated on. Some of the factors which will enhance candidates’ chances are elements such as :
- Ease of use
- Cross platform compatibility
- Store support
- Add-on features, such as loyalty card & peer-to-peer payment support
- Transaction pricing
Trends notwithstanding, it’s the current technology embracing generation that will have the last word on whether or not NFC wallets will be a hit.
