In our increasingly globalized, connected world, it’s easy to experience a sense of displacement and confusion when it comes to the money in our pockets. Consider this: You’re boarding a plane for a business trip to Sweden when you’re suddenly struck by a wave of anxiety as you realize that you forgot to exchange your dollars and euros to the local Swedish currency, the krona. How will you pay for the taxi from the airport? Or for a small snack and a coffee before reaching the hotel? Your fears, though, are quickly alleviated: over five days of paying for restaurants, cafés, bars and cab rides, you never once have the privilege of holding a single krona (paper or coin) in your hands. Yes, money—in its material form, at least—is no longer essential. In fact, it could be disappearing all together.
Individuals and companies buy and sell more stuff than ever before in human history. The number of daily transactions is on the rise, yet the proportion of transactions that are done in cold cash is tumbling. Plastic cards and virtual payments have taken over, and it’s the leather wallet that used to hold your money that finds itself on the endangered species list.
Enter the Virtual Wallet
For the longest time, credit cards seemed like the nexus of money virtualization. A quick two-way swipe would record the card information physically embossed on the card, while a signature authorized the transaction. Magnetic bands eventually took over, their swiping being one of the last analog remnants of the payment process. But even those are being gradually replaced by the tap-to-pay radio-frequency chip (RFID) powered process, which—no surprise—mobile phone technology can now easily emulate.
So we are now at the point where hardware makers are trying to fold the traditional wallet—now empty of cash and, soon, empty of cards as well—into the smartphone, thereby gaining an even stronger hold on the “digital lifestyle.” Google Wallet’s initial proposition was to use some mobile phones’ near-field communication (NFC) chip to replace the cards in your wallet. Entering a security code on your NFC-enabled phone now allows it to send your appropriate card details to the merchant’s terminal. Apple Passbook and Samsung Wallet are app copycats proposing a repository for cards, tickets, boarding passes and just about anything that used to be associated with a physical paper stub.
Everything in Its Right Place
The virtual wallet bears the promise that it'll make our lives easier by centralizing information and making that information readily accessible. Just as you check your email, you can look at your phone at any time to know what your banking balance is. You can also easily secure passes for the premiere of the latest blockbuster, organize and archive multiple flights and hotel bookings, and you don’t have to worry about losing your tickets to the next Rolling Stones concert, which is still four months away. Yet, all that practicality may turn out to be a problem.
What happens when your cellphone battery dies, after a long day of emailing and tweeting during a conference, mere minutes before you offer to grab that dinner check for your new client? Is your concentrated financial data and identity more or less at risk when a smartphone is stolen or when a leather wallet is pick-pocketed? How easily can a virtual wallet be hacked? All these technical innovations are not worth much if they put the customer and end-user in a higher-risk situation than before. Empathic design is necessary to understand and solve the potential problems that new technology may impose on the customer.
A Bird in the Hand Is Worth Two in the Bush
The one thing all these new technological payment solutions may not address is the very human sentiment toward the disappearance of money. As if the transition from cash to cards wasn’t unsetting enough for some (a quarter of the U.S. population still doesn’t use debit or credit cards), the compounding of financial data, the fairly private incarnation of hard-earned money, onto a device geared toward the communication of data should incite even the most adventurous minds to some prudence.
It also makes certain cash transactions, such as giving change to the homeless or giving a colleague 20 dollars so that she can buy you something for lunch, more difficult, if not simply impossible. A controversial stunt at SXSW Interactive 2012 emphasized the irony by equipping some homeless people in downtown Austin with portable 4G hotspots, which you could access by making a donation via Paypal. The fact of the matter is: being cashless makes you less free—or less liquid, to use the financial terms.
From Practical to Meaningful
The virtual wallet is both a source of awe and a source of anxiety. Its potential for technical innovations is almost infinite. If we look beyond the cellphone, the wallet could eventually be coded into a chip that would be tattooed on skin or implanted in flesh and used for payment, identification, health monitoring, etc. But much more than technical feats, what consumers need are single value propositions that deal with both the informational and the emotional aspects of our relationship to money.
As money evolved from precious metal coins, to bills, checks, plastic cards and virtual transactions, it hasn’t been lost on the human mind that money is only a temporary incarnation of accumulated physical labor that will eventually be redeemed in exchange for physical benefits. As we continue to explore the technical possibilities, the practicality of increasing concentration and virtualization has to be compensated by a heightened sense of ownership and trust. Money, in and of itself, is not the issue. Human sentiment is.