Open up your wallet.
Go on. What do you see?
My bulging cowhide has swallowed half a dozen loyalty cards, my licence, my Medicare card, three debit cards, a couple of discount fuel dockets, and $45 in notes. No wonder I have lower back problems – my right buttock hasn’t touched a chair in 12 years.
Now imagine your wallet being your phone, because at some stage – and sooner than you think – it will be. Granted, the idea of a ‘cashless society’ has been around for nearly as long as The Jetsons (Gen Y translation: it’s a cartoon, kind of like Futurama), but don’t throw it in the same recycling bin as the ‘paperless office’.
For the digital doubters it’s worth pointing out that banks have been the shrewdest exploiters of technology. Younger readers will be shocked to learn how their parents, in the 1970s, were forced to bank at their local branch because only those tellers could verify their identity and signature. Now we take ATMs and credit cards for granted.
The mobile payment revolution has already begun. According to Google, there are more mobile phones in the world than there are dunnies. And last week a Deloitte report forecast that within five years, two and a half billion people will purchase $170 billion worth of stuff via mobile.
But the banks’ pay cartel is about to get whacked. That’s because the two biggest smart-phone manufacturers in the world, Samsung and Apple, will take the electronic chip that’s in your credit card and build it into their latest phones.
The newly released Galaxy S3 has already added the chip (called ‘Near Field Communication’ or NFC) and created Google Wallet, which effectively turns your phone into a credit card. All you do is wave the phone near a merchant’s terminal and make a transfer.
But the soon-to-be-released iPhone 5 will really get us rocking or, more correctly, waving. According to Citigroup, Australia has the second-highest penetration of iPhones in the world. And it’s not like the planet’s biggest company doesn’t have the processing chops – they already have 400 million credit cards on their files through their iTunes payment platform.
You can understand why the banks (and their affiliates Visa and MasterCard) are worried. After all, people line up out the front of Apple stores the same as they do at bank branches – but for very different reasons.
But while companies like Samsung and Apple are trying to crack the mobile payment code, they won’t be able to break through until they convince (struggling) retailers to invest in new, expensive, point-of-sale infrastructure.
Retailers, however, may be lured by another currency – you.
Drug Dealers, Casinos, Kids and Smurfs
Ask any drug dealer what the most discreet way to pay for anything is, and they’ll tell you it’s cash. Mobile payment systems are the exact opposite: they can give the retailer information on your age, sex and shopping history – in other words, more chance to flog you more stuff in the future.
The last thing we need is to give marketers more power to manipulate us – especially given that mobiles make it so easy to click (or wave) and buy. Casinos exchange your cash for coloured chips so you don’t notice you’re blowing next month’s rent – and it’s the same when you pay for something without handing over the cash.
That’s one reason why whenever I’m speaking about money at schools, I don’t do it with a chart – but with a suitcase full of (fake) $100 notes. When I pull out wads of cash and start throwing it around, I get the attention of every person in the room (including the teachers).
It’s also one of the reasons iTunes is potentially dangerous for kids. Take the popular Smurfs app, for example, which encourages kids to click and buy virtual ‘Smurfberries’ and virtual ‘wagons’. All harmless fun, until Mum and Dad get the bill (debited to their credit card) and work out that a Smurfberry costs $4.99 and a virtual wagon costs $119.
You think you’ve got bill-shock on your mobile right now. Just wait a few years.