[January 11, 2014]


(Observer (UK) Via Acquire Media NewsEdge) Barring a few changes, the standard mix of loyalty cards, credit and debit cards, and cash in a wallet is much the same as it was 20 years ago. But there's a big prize waiting for the first company to convince us to ditch all our metal and plastic for something more 21st century.

1 The big three Silicon Valley has taken the lead in digital payments online: Google, Amazon and PayPal. Now they are trying to build their businesses in the physical world. Google's Wallet service, right, lets users put cash on their phone to spend in-store as well as online. And, with near field communication technology, NFC turns a compatible Android phone into a contactless card.

2 Google Wallet's real wallet The company has also just released a physical Wallet Card, which lets you spend your balance anywhere in the US where Mastercard is accepted. It's basically just another debit card but hooked up to the Bank of Google.

3 The Coin card The aim of the $100 Coin, launching in the US this summer, is to allow one card to do the job of every other one. It scans the magnetic strip on the back of the cards, and then replicates the strip electronically on its own back.

4 Square Square, Twitter co-founder Jack Dorsey's new company, provides small businesses with an appendage, below, that plugs into the headphone jack of a mobile phone and allows merchants to swipe cards and take payments. Every merchant using Square to take card payments can also take payments directly from the Square app on customers' phones.

5 US Google's Wallet Card, Coin and Square are unavailable outside the US. There are the standard commercial pressures to blame, plus in the UK we've moved to a chip and pin system. That is significantly more secure than the magnetic stripes still used in the US, but also harder to programme for.

6 iZettle But some companies are dealing with chip and pin. Stockholm's iZettle lets stores use an iPhone or iPad to take credit card payments, but the more complex technology comes at a cost: iZettle's chip and pin reader, right, costs almost pounds 100, as does PayPal's competing hardware.

7 NFC payments Mobile phones that can carry out contactless payments have been available in the UK since 2011, but the technology hasn't taken off. And most of the services require you to set up a separate digital wallet, rather than linking directly to your bank account.

8 Horrible fragmentation Every company has its own, non-transferrable, digital wallet app. In 2014 some of that fragmentation should end as Vodafone, EE and O2 form a mobile wallet service, "Weve".

9 Bitcoin Bitcoins are simply chunks of data on a hard drive that can be bought. Their fully digital nature gives them potential as an international currency, and allows users to transfer them between each other without having to go through banks.

10 The elephant in the room Some suspect Apple has a plan up its sleeve: a combination of its vast horde of credit card data, Touch ID fingerprint scanners and new "iBeacon" technology for short-distance communications could create a fearsome competitor.

Alex Hern (c) 2014 Guardian Newspapers Limited.

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