Smartphones As Virtual Wallets

With Google, Mastercard, and Visa experimenting with smartphone 'virtual wallet' apps preloaded with a user's credit and delivery details, retailers should be eager to implement the new technology. Such apps would make checkout easier and faster -- just wave the phone at a receiver and all the payment details transfer in an instant. No more swiping and signing, just waving. Automatic coupon deductions, account access, rewards, and receipts all pile into the phone, too.

However, problems are emerging. Connections drop, so consumers don't know if the payment went through, so they try again. And often again. And again. Hence, consumers pay multiple times for the same item. Whatever time and effort retailers saved on the front end is now eaten up at the back end crediting the account or dealing with dreaded chargebacks. That's not only inefficient, but the retailer looks bad, too.

Worse, hackers show cunning in breaking existing security schemes to extract personal information from databases, so smartphone technology would offer another avenue for criminals to collect consumer data. Cyberattacks will continue to increase as we move into interconnected clouds, so caution may be the watchword before rolling out mobile e-commerce technology. Smartphone payment systems will eventually become as ubiquitous as today's debit cards, but early pioneers often take a lot of arrows before reaching the promised land.