Mobile E-wallet-s (1)

Published on June 24th, 2013 | by Danny Roberts


An End to the Wallet?

A few weeks ago, at my college reunion, I ran into a friend who now works for Square. In case you’re not familiar with it, Square’s an American mobile payment startup that allows you to pay using only your name at participating businesses — you “check in” to the business using your app, and then say your name at the register and presto, you’ve paid. To demonstrate this, my friend took me to a coffee shop and bought us coffee using the app. It all looked pretty smooth. Then he sent me one dollar by simply shooting me an email with ‘$1’ as the title and a special Square email address CCed. It was all pretty cool, I thought, but then, I’m a tech blogger. Another friend, who does environmental research, asked: “Couldn’t you have just handed him a dollar?”

That afternoon in the coffee shop is probably as good a demonstration as any of where Square and similar mobile payment startups are today. The idea of paying with your phone has some cachet, especially with the tech crowd. But even in the relatively tech-friendly US, no one is quite ready to throw away their wallets just yet. There are a number of reasons why that’s the case:

Many shops don’t take it. While Square works fine in the hip coffee shops and boutiques of trendy cities, it’s not going to work (yet) on the subway, or at the shipyard down the street a few minutes from my home in rural New England. A wallet replacement app is less compelling when it can’t actually replace your wallet, so Square is kind of in a bind — to get more businesses signed up, it needs more users, but to get more users signed up, it needs more businesses.

Users have security concerns. Perhaps it’s unfair or irrational — as far as I know, Square is quite secure — but plenty of people simply feel uncomfortable with the idea of digital money. With all the recent stories about NSA surveillance and hacking, it’s hard to blame them, really. Say what you will about the inconvenience of cash, but it’s not ever going to get hacked.

Sometimes, regular money is easier. As my environmental researcher friend pointed out, sometimes using cash is just easier. Being able to send money in an email is cool, but it’s not really any quicker than just handing someone a dollar when they’re right next to you anyway. And again, a wallet replacement app is less compelling if it can’t totally replace your wallet.

With that said, Square has been growing and it will continue to grow for several reasons. First, people like new things. Second, it is sometimes more convenient than conventional payment methods, and since people already take their phones everywhere anyway, it’s not a lot of extra effort to start using Square from time to time. And finally, the service is simple enough for business owners that it’s likely to catch on sooner or later even in small businesses if for no other reason than that it makes it easy to accept credit cards.

With that said, I think we’re still a long way from being able to throw our wallets away. Cash and credit cards are payment systems that virtually everybody nationwide supports. Even with successful-internet-startup growth speed and famous investor backing like Square has, catching up with — and replacing — a service that has 100% market penetration is going to take some time. I do think there will be a day when cash is no longer necessary at all. But even though the technology exists today, I expect it’ll be at least a generation, and probably longer, until we actually see that realized.

In addition to everything I’ve mentioned above, there’s also just something about physical money that’s satisfying in a way I think many people will be hesitant to abandon. It is the tangible fruit of our labor, and somehow, seeing the numbers go up in a bank account isn’t quite the same as holding a crisp $100 bill in your hand. That won’t stop people from adopting Square any more than it’s stopped people from saving their money in banks, of course, but it does mean that Square or some other mobile payment service isn’t likely to totally redefine the way we pay for everything anytime soon.

(Plus, if everyone just uses Square, then Americans will have to give up their hope of ever doing things like “making it rain” or having a suitcase with a million dollars in cash handcuffed to their arm.)


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