In general, a digital wallet is a software application, usually for a smart phone, that serves as an electronic version of a physical wallet.
Google launched a product called Google Wallet in May 2011. According to Stephanie Tilenius, vice president of commerce at Google, the application has the potential for storing information on other cards, such as driver’s licenses and health care cards. Other companies, including Visa, are also either researching or developing digital wallet products.
Because digital wallets are on devices that connect to the Internet, they will eventually be able to access much more information than could be carried in a physical wallet. Jenna Wortham describes the potential in a New York Times story about Visa’s digital wallet:
“The company says that a customer’s entire financial history could be securely stored in one spot, along with frequent-flier accounts, medical benefits, even appliance warranty information from Best Buy, replacing the jumble of account information that most people have stored in different locations — on and offline.”
In one scenario, for example, the health care card could connect to the owner’s electronic health record (EHR), making his medical history immediately available in the event of a medical emergency. Such a capacity could have an impact far beyond the efficiency of current mobile-payments technology that allows a smart phone or vendor transponder to be used for wireless point-of-sale (POS) payments.
Although digital wallets -- especially in their full incarnation -- could have a great deal of impact, their development is hampered by competitive issues. Drew Sievers, chief executive of mFoundry, describes the situation: “It all comes down to who gets paid and who makes money. You have banks competing with carriers competing with Apple and Google, and it’s pretty much a goat rodeo until someone sorts it out.”
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