Paper currency was invented in Massachusetts in 1690 and the wallet was invented to have a place to store and carry the cash. Barney Garcia said that wallets today are more often used for carrying credit cards. In the near future, we may not need traditional leather wallets at all. The e-wallet or digital wallet is not a new idea, and there are multiple players working to make the transition from leather to digital happen.
The good news is that the competition between the banks, credit card companies, telecommunications providers, and technology companies may result in multiple choices for consumers. The potentially bad news is that some of them may join forces to form exclusive deals that reduce consumer choice and add new fees to the mix. With four trillion dollars of retail sales in the U.S. alone, even a small percentage of each transaction can be quite lucrative. One model of the e-wallet that I particularly like is the Apple Passbook.
Rather than describe the technology, I will share how I setup my and have been using the Passbook app as a digital wallet. The Passbook is an app that comes with the latest version of the iPhone software (iOS 6). You don’t have to install it — it is part of the suite of apps that comes with the iPhone such as the calendar, phone, contacts, etc. The Passbook can contain airline boarding passes, movie tickets, Target or Walgreen sale coupons, and numerous other items to come. The one I use the most is the Starbucks card. I was never a fan of Starbucks until the Passbook came along. I have to admit that there is some kind of technology gratification associated with the process of buying a cup of cafe misto.
For complete details with screenshots and photos, see Jason Cipriani’s excellent “how to” article. The following is my summary of the process. The first step is to buy a Starbucks card at one of their stores. It can be for whatever amount you want. If you have $6.86 in your pocket, you can buy a $6.86 Starbucks card. Install the Starbucks app on your iPhone and when you launch it, the app will ask you if you want to add your Starbucks card to Passbook. After you tap OK, you can set your favorite Starbucks location, which will then appear on your lock screen whenever you enter the store and the iPhone will put your new electronic Starbucks card at your fingertips. After you have entered your Starbucks card number, the app will give you the option to add your card to your Passbook. The best part is that you can link your credit card to the Starbucks pass and set a threshold for replenishment. For example, when your balance goes below $10, you can have an additional $20 automatically added to your Starbucks pass. Using your new Starbucks pass is a breeze.
When you get close to the store, your lock screen will show an alert. You swipe the alert and your Starbucks pass will appear. You place your order with the barista, and then let them scan your pass just like they would with a plastic card. That’s it! I think Apple and Starbucks are doing this in exactly the right way. It is simple to setup and simpler still to use. There are no extra fees. The only shortcoming I have seen is that some locations do not yet have the Square software for their payment system. The company owned stores do, but some of the franchised locations do not. One of the franchised stores at Orlando airport does not have the software yet, but takes your iPhone and keys in the card number. Whether it is keyed in or scanned, the balance displayed on the Starbucks pass gets updated after a transaction.
As near field communication (NFC) becomes more prevalent, the Passbook process will get even simpler. Assuming the next iPhone has NFC, you will be able to pay for your purchases by just placing your iPhone within a few inches of the cash register. In the meantime, the scanning approach works fine, just as it does for scanning your boarding passes.