E-wallet vs. traditional wallet: Electronics trump the leather

Will the day come when you will routinely leave the house every day without your leather or faux-leather wallet? You bet, at least for many folks.

Electronic wallets or e-wallets for mobile payments will likely grow from a number of phenomena.

Let's start with the smartphones that will enable the movement. It is not a stretch to say that many people already cannot imagine going out of the house without their smartphone in the morning. Many of you probably feel as naked without your smartphone as you would if you misplaced your wallet. Let's look at some facts from the recent Gartner IT/Symposium that truly begins to show you why e-wallets could become the norm.

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First of all, the growth of mobile devices shows no limits. For example, Gartner said worldwide sales of mobile devices totaled 428.7 million units in the second quarter, a nearly 17% rise over the same quarter of 2010. By 2016, the installed base of mobile PCs and smartphones will exceed that of desktop PCs, Gartner says.

Then there are the applications that will spark payment and other industries. By 2014, there will be more than 70 billion mobile application downloads from app stores every year. By 2015, 40% of the world's smartphone users will opt-in to context service providers that track their activities with Google, Microsoft, Nokia and Apple, continuously tracking daily journeys and digital habits for 10% of the world population. This development is important, as your smartphone can figure out where you are and will then let you know about locations, sales or other places you can spend your money.

While the future numbers point to the real possibility of an e-wallet world, some of the key technology underpinnings of that world are already in place. For example, Sprint, Verizon and AT&T already support near field communications, the key technology that will help make e-wallets possible.

Then there's Google. The company arguably has been out front on the e-wallet movement with its Google Wallet mobile payment platform. The e-wallet uses NFC technology to send very short-range signals to nearby NFC tags to complete payments. An article in Network World recently noted that stores will need to have NFC tags embedded into their credit card processors in order for your Google Wallet to work, but Google has started down that path by lining up at least 15 big-name merchants that will accept Google Wallet payments starting today, including RadioShack, American Eagle Outfitters, Subway, Macy's, Footlocker and Walgreens.

So what could slow this juggernaut down? First near-field communications likely won't become an integral part of smartphones for a couple years. Communications chip manufacturer Broadcom has estimated that about 15% of all smartphones will have NFC capabilities by 2012 and Google doesn't see near-field communications becoming ubiquitous until 2014 or so.

Security is an obvious potential issue. While Android 4.0 includes facial biometric technology, supports encrypted credit card data storage and remote wiping technology, security features will need to be simple yet strong to enable a mass market of e-wallets of the future.

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