Who will win the wallet race?

For some years, technology companies have been trying to add functionality to turn our smartphones into cellular wallets, thus making it unnecessary to carry round a wallet with a bunch of credit cards, membership cards, and so on.

The technology involved is called NFC, Near Field Communication. For this purpose, what is needed is a “reader,” something that is already included in almost all smartphones, including yours. Just to make it clear, Android already added support for this technology back in 2010, and all of the major cell phone manufacturers have been adding NFC technology support for the last three years.

Furthermore, the “other side of the coin” – the credit card companies, cellular providers, and banks – almost all support the technology already, or have pilot programs that are well on their way to completion.

If so, why are most of us still walking around with magnetic stripe cards? The answer was perhaps best expressed by the CEO of PayPal: “Is it easier to hold a cell phone up to a (payment) terminal than to ‘swipe’ a credit card? I’m not at all certain…”

Indeed, payment through NFC has still not reached the necessary critical mass of users, in spite of the investment by numerous companies in making the technology accessible.

But there is one major company missing from this process – Apple. In spite of repeated reports that the company is going to adopt NFC technology, Apple has consistently refused to include the chip in the company’s iPhones. But their new operating system, iOS 7, reveals a little of how the company sees the future of the “cellular wallet.”

Apparently, Apple’s answer is iBeacons. This system uses the familiar Bluetooth technology, allowing secure communication on the one hand, while on the other hand using a minimum of power.

Apple has begun using the technology in all of the company’s shops in the United States, to provide information on discounts, products and more. It works by determining the exact location of the phone, without the need to actually touch the cell phone to the item.

The interesting point is that every iPhone, from the 4s on, automatically supports this technology. In other words, that’s 250 million devices, including iPads, which are already in use.

But because we are talking about Bluetooth technology, which is found in many of the new smartphones, Android devices will also support payment by means of Bluetooth.

PayPal recently launched a pilot in which shop owners can receive payments through Bluetooth, by means of a simple device plugged into any electrical outlet.

Has the solution to payments using cell phones actually been under our noses all this time? Will we really see the end of wallets full of credit cards soon? Time will tell.