The mobile wallet does more than help you make fast, convenient payments with your phone. It’s a developing financial tool that’s changing the way you can manage your money faster and easier than ever before. Let’s take a look at the different roles your mobile wallet can take on.
What is a mobile wallet?
At its core, the mobile wallet is a digital version of your old billfold. It can be any device, phone or otherwise, as long as it’s capable of connecting with the Internet. Once equipped with the right apps, you can use this device to access your chequing account and use it to make payments from your phone, tablet, or smartwatch.
While most apps currently available to download simply substitute for cash or credit in a retail setting, there’s a growing ecosystem of apps and websites that increase the mobile wallet’s influence over your finances. FinTech companies, online lenders, and even retailers themselves are offering apps that help you spend, borrow, and save your money.
How does the mobile wallet work?
Like most tasks your phone does, using your mobile wallet belies the advanced technology that powers it. It relies on a complicated method of wireless communication using NFC (or Near-Field Communication) chips. These chips are what power any contactless payment method, including your tappable credit and debit cards.
Why would you use it?
According to a study performed by Forex Bonuses, Canada is already leading the world in cash-free transactions — second only to Sweden in use of digital payments. Not only does a mobile wallet simplify your shopping experience by making it easier and faster to pay for your latte at Starbucks, but it may also be the only way you could purchase your caffeinated treat in the near future. A study conducted by Moneris, a company that processes debit and credit transactions, forecasts only 10 percent of the money spent in the county will be cash by 2030. Americans, on the other hand, are a little slower to adopt cash-free alternatives, though experts expect the tide to change in 2018.
It also has the potential increase your financial inclusion in other services, including money management, online lending, and investments. Take, for example, an app like You Need A Budget. True to its name, it helps you create a budget, so you can keep track of your spending, review your financial accounts, and receive alerts when you’re close to breaking your budget. There’s also an online lender like GoDay that connects its customers with online payday loans. They’ve created a website that simplifies the borrowing experience, so customers can apply, review, and secure personal loans from their home. Then there’s an automatic investment app like Wealthsimple that provides a combination of robo-advisors and real financial advisors to create passive portfolios.
Every new app solidifies the mobile wallet’s presence in the economy. While you may not use it often now, research suggests you will in the next decade. That means you have roughly ten years to get used to using your phone as a financial tool more often. Practice makes perfect, so take your mobile wallet out shopping. Your time now will prep you for when the world becomes a cash-free economy.