Walk into a store, submit your shopping list, and a map directs you to the peanut-butter-brittle ice cream you crave. When you get to the front of the line, just bump your phone on the reader and you also get a discount via an e-coupon you've downloaded. Or scan pictures of the lasagna, salad and French bread you want for dinner from a Safeway ad as you wait for the train and pick up the bag on your way home. This is the year the surging popularity of the mobile wallet--a smart phone that also acts as credit card, checkbook and shop-bot--will radically shift shopping habits. It's the biggest thing in retail since the credit card got us talking about a cashless economy.
The driving force is communication: cash can't communicate, but phones can. Your alarm clock, radio, camera, landline and GPS, even your laptop, have already been displaced by your phone. Why not the $69 and four credit cards the average American carries? "Everything eventually migrates to the cell phone," says Scott Ellison, an analyst with IDC who tracks the mobile industry. "And when it moves, people tend to do a lot more of it."
Tammy Lam, 26, a p.r. executive in San Francisco, uses her T-Mobile HTC myTouch phone to pay for just about everything. "I ordered dinner from my local Thai on GrubHub while sitting on the bus on the way home from work last night. I bought all my Christmas presents on my phone. When friends and I are out, we use Groupon to buy a meal," says Lam, who uses her phone instead of her computer for shopping even when she's at home. And she prefers it to cards or bills when she's out. "I hate cash," says Lam.
Lam is an early adopter, but there are enough people like her to set off a mobile-wallet war that will escalate this year, converting billions of dollars' worth of transactions to cashless in the $4 trillion retail economy.
Google, the company that changed online search, just launched Google Wallet in partnership with Citibank, MasterCard and Sprint's Nexus S 4G phone. PayPal, the company that solved secure online payment, will announce 20 partnerships this year designed to allow you to order ahead, self-check-out in stores and simply use your phone number and a PIN to pay for purchases. Isis--a Verizon, AT&T and T-Mobile wallet with Visa, AmEx, Discover and MasterCard partnerships--launches midyear in Salt Lake City and Austin. Visa's own virtual wallet, V.Me, is also on deck. "Anything with an on switch could be a payment device," says Anuj Nayar, PayPal's communications director.
And of course, everyone anticipates a move by Apple, whose stores are already processing sales through iPhones. Apple will announce a wallet this year, predicts Mark Beccue, a mobile analyst with ABI Research. "They have such a loyal following, and they're so vertically integrated--they'll help move everything forward."