The Dutch government (Rijksdienst voor wegverkeer, RDW) made an announcement today that from 2020 it will be possible to digitalize your driver’s licence. The government will introduce a special mobile application in which you can load your driver’s licence and show it directly on your smartphone. It is already possible to pay by using your smartphone, and there are multiple applications, like Stocard, that store your loyalty cards in one online environment accessible from your smartphone. So my question is: do we still need a wallet in 2020, or do we only need to bring our smartphone with us?
Paying by smartphone gains popularity in a fast pace, but is still in its infancy. Only 9% of the Dutch population uses a smartphone to pay, for instance at the grocery shop, and approximately one third of the population would like to pay by smartphone. So around 60% of the Dutch population says that it is not interested in paying with its smartphone in the near future. But I think that this number will definitely decrease in the upcoming years. The use of applications which store your loyalty cards is also increasing. Besides, more and more shops make it possible to download an application instead of having to bring your loyalty cards to the store. So after the announcement of the RDW ‘everything’ can be integrated into your smartphone (since a Dutch license is also a ID card in the Netherlands). Your smartphone can store your Money, Personal details, License and loyalty cards.
But there are reasons why, I think, we still have to bring our wallets in 2020. I will discuss the three most important limitations briefly. Not all the current payment systems are compatible for the mobile payment yet. In march 2016 125 thousand of the 325 thousand pin devices were compatible with contactless payment, this is rapidly increasing but there will still be shops, restaurants or vending machines who cannot accept contactless payment in 2020. The second limitation is that not all (smart)phones can be used for paying, the phone must have a NFC chip incorporated. Currently in the Netherlands only the latest Android phones can be used for contactless paying. And for instance, IPhone cannot be used, since Apple only accepts payments through its own payment application, which is not introduced in the Netherlands yet. Besides the banks and the mobile companies will have to go through severe negotiations about transaction fees for the mobile companies. The third limitation is resistance by the general public. People do simply not see the added value of paying by mobile phone or worry about their privacy, and others will first want to see how the early adopters react to it and follow later when the system is tested more intensively. Privacy has always been a critical point in the digital world, because there is a possibility that hackers hack into your phone. If your money and personal details are all on it this may cause some huge problems.
I think in 2020, smartphones will still be a complement our wallet but not a total substitute yet. This will take a few more years, but I definitely think that the wallet will ‘disappear’ in the future.
What do you think? Let me know, in the comments below.
References
https://www.ing.nl/particulier/mobiel-en-internetbankieren/mobiel-betalen/index.html
http://www.marketingfacts.nl/berichten/de-staat-van-mobiel-betalen-in-nederland-in-2016
http://nos.nl/artikel/2135672-app-gaat-plastic-rijbewijs-vervangen.html
https://www.rtvnh.nl/nieuws/192989/rijbewijs-in-2020-op-de-smartphone
Dear Suzanna, thank you for your post! I have to agree with you – I do not think our wallets will be completely replaced by smartphones by 2020 (that is already in less than 4 years!). However, they might be completely replaced by smartphones say 2050. It takes time to adopt, and I for example would not like paying by smartphone. It also would be very strange to me to have your driver license on your phone – isn’t the idea to drive without a phone? And what about if your battery of your phone dies? I guess only time will tell if we will be dependent on our smartphones for payment and showing our driver license/identity!
I agree with your arguments about the people’s willingness to use mobile payment in the near future and I also agree with the argument that the technology is already there and will be even more broadly available by 2020. The thing you did not mention is that what will have happen to Cash and how the rules and regulation regarding cash will change? The physical money has been there for centuries and that is for a reason. Cash has some features that the electronic systems can never have. The strongest features are 1) it is untraceable, its widely accepted and 3) its reliable. Cash is the best option when you really want to be sure that you can pay. Yet,There is no technology that covers all the features of Cash. Unless we have found alternative ways with more or less the same features, it would not be smart to get rid of cash (Eveleth, 2015).
Eveleth, R. (2015) The Truth about the death of cash [online] available at: http://www.bbc.com/future/story/20150724-the-truth-about-the-death-of-cash [accessed on 03-10-2016]
Dear Suzanna,
Great article! It gives a very good and interesting insight in the contactless payment industry.
From personal experience and opinion, I feel that we could already abandon our wallets much before 2020. Looking at the advancement of the technology and adaptability rates amongst people, I feel that 2020 is a fair estimate about the time when most of the developed world will become contactless.
Since you mentioned the limitation that Apple only uses its own payment systems
It is a much more safer way to pay as card details are not shared and fingerprint verification is needed when making payments, which avoids the risk of someone else abusing your card. Most of the current shops have already adopted to the contactless payment devices and this will only accelerate further. Most of the payments systems and banks in US, Canada, Australia and UK have already jumped the ship with this and it’s only a matter of time when others fully realize the potential of this technology. Infact, you can even pay with apple pay on all Transport for London systems (underground, buses, overground, trains, etc).
Regarding the electronic national ID’s, most countries are already implementing strategies to set up their national ID’s on mobile systems, however, there is still a concern with fraudulent behavior and hacking that needs to be taken care of and which is currently slowing down the progress. Companies such as HID Global and Gemalto are already offering such services but most governments are already looking to implement their own systems. With the evolution and success of fingerprint systems and other forms of sensors, these changes don’t look very distant.
Some countries have moved far ahead towards becoming a cashless society. Retailers in Sweden and Denmark are legally entitled to refuse cash as payments and it is impossible to pay cash for buses or trains. From a personal experience, I can also say that even in Sydney, it is impossible to pay using cash at some counters and transport methods.
I feel that the change is happening at a faster rate than most people currently think. It looks only a matter of time when our society becomes cashless and the need to carry wallet becomes nonexistent.
Hi Suzanna, I think this is an interesting post. I think the biggest issue is privacy, since people get scared when it’s so easy to pay etc. Also, I think it’s hard for the current older generation to not bring a wallet, because a lot of them don’t know how to use a smartphone. But with the new generation that is used to all this technology, I think in the future we probably won’t need our wallet anymore. It will probably not happen so soon in 2020 already, though. I think it will take a few decades more for the smartphone to fully replace our wallet.
Hi Suzanna.
Thank you for sharing your interesting post!
For now, I do believe that we all still have a wallet and we still use coins and bills to pay. However, there has been a significant decrease in the usage of cash money and an increase in using the debit card for purchasing products (nu.nl, 2015). I do believe that most people don’t carry around that much cash anymore. That is why you also have wallets that contain space for you cards and not that much space for your coins or bills, such as the Secrid wallets. I do agree with you that smartphones will become a complement to our wallet in the future.
However, I do think it will take some time to truly implement this in all phones. I also think it is very convenient being able to pay with your phone, since most people always have their phones with them. The only downside that I see right now, is that you will have a problem when the battery of your phone dies and there is no more cash money to pay in stores. Besides that, I also think that companies have to show the benefits of being able to pay with your phone.