The fact that a Smartphone could act as a card is an inconsequential change. You still have to carry a wallet, and as long as that’s the case, a simple plastic card remains easier to use, given that the technology for reading them is universal and all the proposed mobile alternatives require new, often separate, readers and work only with certain vendors – you’ll still be carrying plastic for the other banks’ and merchants’ systems. Payments can’t get more mobile than they already are.
Replacing credit and debit cards with something embedded in your Smartphone is not worth the bother. But what if you could replace the entire wallet? That would be a worthwhile change. Open your wallet, and what do you have in it? A driver’s license or other government ID. Credit and debit cards. Cash. An insurance identification card or two. Probably some family photos. Perhaps a library card, a store loyalty card, a transit pass, and a company or building ID or access card. Maybe a few other membership cards.
Most of these cards are just information holders, storing an account number or membership number. Those are easily replaced with data on your Smartphone, which could be presented when needed in any of several ways: as a facsimile of the physical card, as a bar code or QR code for scanning (such as already used by many airlines for electronic boarding passes), or as bits in an embedded NFC or RFID chip. One or more apps could easily handle these information cards’ data.
I’d expect Google, Apple, Microsoft, and RIM to each offer such an app as part of the core app collection on their respective mobile OSes. Such an ID app would have a major advantage over physical wallets: if your Smartphone is lost or stolen, you can log in to your account and invalidate those accounts on that device, then transfer them to a new one.
Credit and debit cards are really no different than any other information card. The PIN is not stored on the card, and the card doesn’t do anything active to prove its identity; there are no smarts on the card. But there could be on a Smartphone version, such as alerts when you’ve reached specified balance thresholds.
One last issue: What about power? A physical wallet requires no electricity to work, whereas a Smartphone does. I’m not concerned about that. It’s exceedingly common to have a charger at work, at home, and in the car. Now that the European Union has forced device makers to standardize on USB power, it’s both cheaper and easier to connect a device to a charger, whether yours or someone else’s.
I fully expect that in the not-too-distant future the Smartphone will become your wallet, and that folded leather or cloth contraption will go the way of the wristwatch: abandoned by most, used as a retro fashion accessory by some. Which leads to one more change that will need to occur: Clothing designers will need to rethink the pockets in men’s pants, as the back pocket will not be where you’ll want to carry your Smartphone/e-wallet 🙂