The term digital wallet sounds very trendy. The idea is that all of your payment information would be contained within your phone, so that all you’d ever need to do was scan it and be on your way. Digital wallets used the very Star Trek-y technology known as NFC or Near Field Communication, which was like a very close range tether between two devices.
The market quickly became oversaturated, and most of the products under delivered.
The Rocky Launch of Digital Wallets
Consider how most stores currently perform transactions: you hand a cashier an item, they take your payment and either swipe your card or count the cash, and you’re on your way. Adding a mobile device to this equation means more technology. For a small store with one or two terminals, this is actually fairly feasible because the costs are high but they are lower than paying for 500 stores to make the switch. Larger chains making the switch were not as likely, although Starbucks has made an earnest attempt.
NFC also carried security risks like eavesdropping that made the technology less attractive. It’s not quite outdated yet, but the term is fairly meaningless. Digital wallets aren’t likely to replace our current ones any time soon, although they can still fill a void. A good example is coupons, or financial data. The more we know about the cash we have on hand and potential for savings, the better we can manage our money and build wealth.