Losing your phone is never fun. But losing your wallet is much worse, and that’s one argument where those trying to roll the mobile-payments boulder up the mountain might find some help.
My wife and I, both tech industry media professionals working for separate companies, were all set to descend upon Las Vegas two weeks ago for CES 2012 when her wallet was stolen from a San Francisco bar the night before she was scheduled to get on a plane and check into a hotel. We carry the financial ingredients for modern life– identification, access to cash and credit, and casino loyalty club cards–in our wallets, and finding ways to replace things that important and ripe for fraud when you’re about to go on the road is a nearly impossible task.
All worked out in the end–two weeks later–but multiple trips to a local Wells Fargo branch as well as several conversations with patient but harried customer-service representatives made it clear that the old system of cashless payments, however convenient and established, makes less and less sense every year.
Imagine if her wallet was also her phone, making it the only thing of interest in her purse to the jerk that was also at the bar that night. First of all, the initial likelihood of fraud decreases because current mobile-phone payment systems–offered by Google (NSDQ: GOOG) and PayPal, among others–require the holder of the phone to enter a personal identification number to complete the transaction.
The loss would still have to be reported quickly to the company managing the account, of course. But the identifying details regarding that account could be remotely wiped from the lost or stolen phone and transferred to a new phone in far less time than it takes to replace lost or stolen bank cards. Sure, you’d still need to make a quick decision on a phone (and it would probably have to be purchased in person at retail from your carrier or Apple (NSDQ: AAPL) for this all to work), but you just lost your phone: if you’re among the growing numbers of people who have come to depend on mobile access to the Internet, you’re a person who is not going to wait very long to replace that phone.
In other words, instead of visiting two separate Wells Fargo branches that happened to be open on a Saturday in Oakland with just hours to spare before her flight departed only to kick off a two-week process of phone calls and further visits, she could have headed over to our local Verizon store to assess her options. Verizon would have gleefully taken the opportunity to sell her another phone, of course, but again, she was going to have to replace that phone anyway. And maybe when your wallet is your phone, you start to think about insurance programs that could provide for a loaner phone in the event of theft until you’re ready to make a bigger decision.
Point being, she walks out of that Verizon store with a new device that would allow her to check into the hotel that night with the required credit card for incidentals, obtain cash, pay for meals and cabs, and all else that is part and parcel of modern business travel. The current system provides for a temporary ATM card that doesn’t function as a credit card and a two-day wait for expedited bank and credit cards that Wells Fargo, for some strange reason, did not seem too enthusiastic about shipping to a casino in Las Vegas.
I’ve been a mobile-payments skeptic in the past, wondering last year if Google Wallet was a solution to a problem that doesn’t exist. If you’re lucky enough to avoid theft and loss under the current payment system, then it’s not hard to doubt that the wheel needs reinventing just so a new wave of companies can obtain more data on consumer purchasing habits.
The problem surfaces when you have to move quickly to rebuild a personal payments system designed half a century ago. An awful lot needs to happen for the scenario outlined above to fall into place, and platform wars are probably a given considering what is at stake for traditional payment companies and those eagerly seeking to disrupt the old guard. And I still agree with what I said last fall: this is years away from falling into place on a mass level.
But the concept just makes too much sense. Your credit card is a data string, not a physical piece of plastic: why not enclose that data–and the privileges and responsibilities it unlocks–in a remotely accessible mobile container with an extensive system of checks and balances that has a much healthier respect for that data?
And if one of the companies working on this also finds a way to avoid a trip to the California Department of Motor Vehicles, they may really be onto something.