Think about what’s in your wallet. We’ll even give you a minute to go find it and take a look. You’ve probably got a little cash, some credit and debit cards, a photo ID or two and maybe business cards and photographs of your family and friends.
Now think about what’s on your smartphone. Chances are, you can access all those things and even more – well, all that apart from the cash and the credit or debit cards. But with new mobile wallets including Apple Pay and Google Wallet, soon those cash and cards might be kept on your phone, too.
Since everything you currently keep in your wallet can be stored on a smartphone (or watch or bracelet), we’ve started thinking: will wallets soon be a thing of the past?
Wallets are already being replaced
The fact is, many smartphone users are already replacing cash and cards with their phones. The Consumers and Mobile Financial 2015 report from The Federal Reserve found that more than a quarter of smartphone users have made a mobile payment in the last year, and that number is expected to grow rapidly in the next few years.
According to the latest report from RNR Market Research, the global mobile wallet market is expected to grow at a compound annual growth rate (CAGR) of 36.8 per cent from 2014 to 2019. A report from Transparency Market Research had similar findings. It estimated that the global mobile wallet market will reach a staggering USD1.6 trillion by 2018.
Further, it found that EMEA (Europe, the Middle East and Africa) will make up the largest market. After all, that region already accounted for 40 per cent of the global revenue share in 2011, thanks largely to widespread adoption of smartphones in Africa and of mobile wallets in Europe. And as with most technology, younger people are leading the way when it comes to regular use.
Millennials – those aged between 18 and 34 – have dominated the mobile payment market, making 55 per cent of mobile payments. The reason for this is pretty easy to see. Millennials are young enough to feel comfortable adopting the new technology and they have their own bank accounts and sources of income with which to pay for items.
Moreover, they have come to rely on cash less and less: a full 20 per cent of Millennials hadn’t made a cash purchase worth more than $20 in the past month. That stat came from way back in 2010. Now that more cashless payment options are available, it stands to reason that even fewer Millennials are using cash today.
Why mobile wallets are taking over
So we can see that the future is moving to mobile wallets, but why would that be? The answer is twofold. First, mobile payments are more convenient than cash. Second, they are safer.
Mobile wallets are more convenient in several ways. When people use mobile wallets, they store cash electronically on their phones, so their purchases don’t have to go through a bank’s outside system to be approved. That reduces transaction failure rates significantly, according to RNR’s research. It also makes transactions faster, as users simply press a button on their phones or pop their mobiles up against a near field communication (NFC) reader to make the purchase.
Mobile wallets are also safer than cards or cash are. People can take advantage of their phones security features, including passwords, remote locking and data encryption, to keep their money safe from thieves. Mobile wallets also keep personal details safer, as they eliminate the need to provide full card numbers to shops.
Wallets are notoriously unsecure as well. Life assistance company CPP commissioned research in 2010 that found that Britons lost more than nine million wallets and £765 million over five years. Even worse, more than three-quarters of those people never found their wallets and cards again. And while it takes on average 26 hours for a person to report a lost wallet, it takes just 68 minutes for the average person to report their lost phone, according to Unisys.
Say goodbye to your wallet
Simply put, we are already embracing mobile wallets and other mobile payment technology. In the EMEA region, we have been particularly keen to take the supercomputers in our pockets and use them to make purchases. After all, mobile wallets are safer and more convenient than both cash and cards, and people are more than happy to give their smartphones yet another purpose that has nothing to do with making phone calls.
So the questions isn’t "will wallets soon be a thing of the past?" Instead, it should probably be "when are you going to join in?"