Forget leopard-print or Louis Vuitton, the latest wallets are more likely to be found at Future Shop than in any fashion spread. That's because digital is the latest trend in payment, and it's quickly coming to a cash register near you. But don't ditch your trusty Coach clutch just yet: not everyone's cool with the idea of a cashless society. Here we'll take a look at virtual payment from both sides. Is it time to ditch your wallet and go digital? You be the judge.
How to pay with nothing
According to The Globe and Mail, Canada is preparing to launch virtual wallet technology across the country as early as this year. It works like this: rather than keeping cash and cards in a physical wallet, these are consolidated electronically and accessed through your smartphone. Practically speaking, this means you can take your loot to the counter, tap your phone on a reader, enter a password and you're on your way. It's a lot like using a debit card, but rather than having to troll through your oversized tote, you'll be able to call up whatever you need on your phone (which, let's face it, is probably always in your hand anyway). In the future, these digital wallets may be able to hold not only payment information, but also other data such as your driver's license, health care card and library card.
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So, just when you thought you couldn't be more in love with your iPhone or BlackBerry, it becomes a sort of digital sugar daddy (now if only it could be programmed to cook and tackle the laundry...). But digital wallets aren't just designed to be cool. They provide mega convenience and some measure of security. A wallet can be stolen by any old hack, while stealing the payment information on a smartphone requires serious hacking skills.
The drawbacks of going digital
Of course, it isn't just consumers who stand to benefit from instant mobile payments. For banks, phone companies and retailers, the digital wallet means a whole new avenue of business. And that, critics say, is exactly why they'll be sticking to cold, hard cash.
Think about how cash - those increasingly rare, wrinkled dollar bills - differs from digital payment. Crooks and felons tend to use cash exclusively, and it isn't just because carrying a big wad of it is important for their street cred. Cash can be held, hidden and spent without a paper trail. For most people, however, money isn't just physical anymore - it's digital: zeros and ones stored in a computer. When you deposit money at the bank, it's logged. When you use your debit card or credit card to pay for something, it's recorded. It's something we've become accustomed to, and it's part and parcel of the security and convenience banks provide.
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The digital transactions that occur through a mobile phone are similar, but they take things one step further because unlike a debit card, your smartphone can be connected to a network at virtually any time. This means not only can your phone track what you buy, it can determine where you are, what you're doing and who you're with. That's valuable information for marketers — the more they know, the more they can sell you.
Case in point: David McKay, head of Canadian banking at RBC, told The Globe and Mail that a fast food restaurant could track consumers using their digital wallets, find out which ones were within a certain radius of the restaurant and send them a text message or advertisement about a lunch special. Okay, so maybe this isn't as creepy as Big Brother turning his all-knowing eye on you and telling you what to buy for lunch, but critics say it's yet another step toward a world where our inability to keep anything to ourselves threatens our privacy — and perhaps even our sense of self.
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It's also very big business for banks, which will be doing a lot of behind-the-scenes work and collecting fees for these services. More pertinently, if people make the switch to virtual wallets, banks stand to gain access to a lot more valuable personal information than they already have —information that could be sold to marketers, and of much greater consequence, information that could be hacked by someone who will use it to steal your money outright, rather than just sweet-talk you into spending it.
Will you go cashless?
It'll be interesting to see how many consumers go cashless when virtual wallet technology is rolled out in Canada. This is a relatively new technology, which means it will most likely include a few bugs. That might leave a lot of people on the sidelines, at least for now. But whether you're ready to go digital or not doesn't necessarily matter. Cash transactions are already becoming increasingly rare. The use of debit and credit cards — even for small payments — continues to rise in Canada. The Royal Canadian Mint even introduced a form of currency designed to help Canadians unload those pesky loonies and toonies.
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Suffice it to say, a cashless world is already in the works. And, like any new trend, it's taking on a life of its own...despite the critics.
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