May 14, 2011 /
Digital Wallets: The Next Big Thing?
I was recently asked: “What’s the next big thing in technology?”
My colleague wanted to know what will be hot a year or two from now that isn’t yet on the radar for most government leaders, end users at work or teenagers at home. Over lunch, my longtime friend who was asking the tough questions challenged me to:
“Step out and take more chances in your blogs like a few years back. You’ve lost that bleeding to leading edge swagger. Where’s that government visionary I know?”
Ouch! (I was feeling a bit uneasy at this point.) I initially thought, “With friends like this…”
Actually, I realized that he had a point. Not much lately on what's coming tommorrow. So I went back and reread earlier articles on cloud computing, identity management, smart phones and social networking in government. (I know, I should have written that 2007 article on social networking about Facebook and not MySpace – but that’s what happens when you pick particular vendors over industry trends. The first to market isn’t always the top winner.)
But moving back to the question at hand, my winner of “the next big thing” award is: digital wallets.
(Yes, “digital wallets” does qualify as virtually unknown, since my eighteen year old daughter responded, “Huh? Will I have to read a blog on this?”)
First, here are a few definitions. According to Wikipedia,
“A digital wallet (also known as an e-wallet) allows users to make electronic commerce transactions quickly and securely.
A digital wallet functions much like a physical wallet. The digital wallet was first conceived as a method of storing various forms of electronic money (e-cash), but with little popularity of such e-cash services, the digital wallet has evolved into a service that provides internet users with a convenient way to store and use online shopping information.
The term “digital wallet” is also increasingly being used to describe mobile phones, especially smartphones, that store an individual’s credentials and utilize wireless technologies such as near field communication (NFC) to carry out financial transactions….”
The rest of the developed world is already using this technology more than consumers and governments in the US and Canada. “Forrester, an independent market research company, reported from a 2010 online survey that less than 6 percent of American adults have ever used mobile payment. In Japan and Korea, however, the practice is widespread. According to consulting company Accenture, 69 percent of respondents to their recent survey in Asia said they favor using cell phones for most of their payments, compared with only 26 percent in Europe and the U.S.”
The New York Times and LA Times each ran articles on Visa’s implementation plans for digital wallets in the USA this fall. The LA Times reported, “Visa said its digital wallet would be able to handle payments online, using a phone, on social networks and person-to-person payments as well.”
An Emory University website said this about e-wallets, “Consumers are not required to fill out order forms on each site when they purchase an item because the information has already been stored and is automatically updated and entered into the order fields across merchant sites when using a digital wallet. Consumers also benefit when using digital wallets because their information is encrypted — or protected by a private software code. And merchants benefit by receiving protection against fraud.”
I recently saw this concept in action at Detroit Airport when e-tickets on a smartphone were used by several passengers to board a Delta flight. (No doubt, this solution is greener with no paper needed.) But while the process may seem fairly simple, the implications for governments are huge.
For example, think about all the credit card payments that your government makes and receives. Will they accept these new payment types at government offices?
Or, what about mobile device policies and/or acceptable use policies for government employees and contractors? Will government issued blackberries or iPhones be used as personal e-Wallets for employee purchases at home? What if security issues arise or the devices gets hacked? The lines between work and home will become blurred even further.
On the other hand, the opportunities for efficiency, savings and positive innovation are evident. From paying for public transportation to reducing fraud in credit card transactions, many aspects of this topic will ensure that we are discussing this digital wallet topic for years to come. Imagine if there was no longer the need for passing around credit card numbers and expiration dates.
It may be slow at first, but get ready for the next big thing for your smartphone to do (or become). I suggest we start thinking about digital wallets now. They’re coming soon to a government near you.
Any thoughts or experiences with digital wallets?