Kaching! Apple, Google and the banks fight over our wallets

The way we pay for our shopping is changing forever very quickly. You are now parenting the first generation of people who will never need cash.

And by Christmas 2012, you may not be using cash – or a plastic card – either.

Members of www.SingleMum.com.au have noticed the first step in this revolution – the new no-signature, no PIN card payments and asked if these are secure.

Visa and Mastercard report surprisingly few instances of fraud using the new no-signature, no PIN rules in countries where these kind of payments are more widespread than in Australia. The rule only applies for purchases under $100.

Contactless “PayPass” and “PayWave” transactions are driving growth for Visa and Mastercard, as credit cards lose their popularity, reported Mastercard Australia’s Head of Strategy David Masters last month.

And these kind of payments are paving the way for the rapid extinction of plastic cards altogether. Within 12 months, we will all be able to use our phone to hold our money and make payments in shops.

Coles, Woolworths, Bunnings, OfficeWorks, McDonalds and many other merchants are all currently rolling out the NFC readers to support mobile phone payments.

Commonwealth Bank customers will be the first Australians to migrate fully to the new no-purse, no wallet world.

This month CBA announced “Kaching” – a mobile wallet app for smart phones that can work with an iPhone cover equipped with a computer chip to interact with eftpos machines.

CommBank confirmed on Wednesday this week that 12,000 of its customers have signed up for Kaching already, even though it is not yet available.

Commonwealth Bank’s Kaching system is the first of many new financial products that bank account holders will soon become familiar with.

ANZ’s goMoney app is expected to evolve over time into a payments device as well.

Another is Google Wallet – an app for smartphones that links to all your bank accounts and helps you budget.

Six weeks ago, shoppers in the USA with a new Samsung S2 smartphone and Google Wallet began paying for goods and services by waving their phone at in-store Mastercard PayPass readers.

Already about two million Australians have downloaded the Coles Shopmate or the Woolworths app on their smart phones. These apps will evolve in fully fledged wallets over time.

“If the big retailers grab control of the digital wallets of most Australians, they can grab control of more our spending,” said Jost Stolmann, chief executive officer of Tyro, a company that provides Eftpos services for businesses.

“Soon your phone with its Visa or Mastercard App and GPS will send you outbound marketing messages when you pass by a favourite big retailer,” said Stolmann. “Your phone will tell you -‘come in and get 20 per cent off right now!”

And if you enter one shop, their competitor up the street may send you a text message offering you a discount to leave.

“Customers will be lured away from owner-operated stores and into the big retailer’s format outlet three blocks further on,” said Stolmann.

All that will happen within the next 12 months, but only slightly further down the track we can expect Apple to enter the market with a payments system that just about everyone will want.

In March, Steve Jobs, the founder of Apple, announced that the company had collected credit card details for 200 million people, making it probably the biggest list of customers, with their card details, in the world.

Apple will use its huge iTunes customer database to underpin a universal cashless payments solution.

Your Apple iTunes username and password, with its’ stored credit, debit, stored value or gift card details, will be able to pay for just about anything in shops and online. You will give your family and friends money by sending them a message or bumping your smart phone against theirs.

All this is coming to a phone near you in 2012. Get ready to say goodbye to cards and cash altogether.

Jason Bryce
Business & Finance Specialist

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