Phones to replace wallets: CommBank

Commonwealth Bank has forecast mobile wallets could replace their physical counterparts by 2021. Photo: Dominic Lorrimer

JAMES HUTCHINSON

KEY POINTS

• Commonwealth Bank believes mobile wallets could replace physical wallets by 2021.
• Globally, mobile payments have grown by 58.5 per cent a year.

The days of bulky wallets could be over by the end of the decade, as consumers move to paying for goods with their phones.

Commonwealth Bank has forecast mobile wallets – a virtual repository of money – could replace their physical counterparts by 2021, based on a survey of 1024 Australians conducted earlier this year.

“I think people are going to have their wallets for a long time but the digital or e-wallet will become an important part in people’s lives,” said Angus Sullivan, executive general manager of cards, payments, analytics and retail strategy at the bank.

“We’re reaching almost to the point of ubiquity around smartphones so I think that’s one big driver. You’re also seeing more convergence around technology solutions – the wide scale rollout of contactless terminals in Australia has been a really big tipping point.”

The results signify increasing ­consumer reception to virtual wallets such as those offered by PayPal, and recently launched by credit card giants MasterCard and Visa.

Globally, mobile payments have grown at a compound annual growth rate of 58.5 per cent and are expected to reach 28.9 billion transactions this year, according to a study from Capgemini and the Royal Bank of Scotland. The big four banks and several technology start-ups have also begun developing new methods of paying for goods through contactless payments tech­nology that allow consumers to tap a smartphone against a payment ­terminal.

The concept has been years in the making, with several aborted trials of near-field communications technology being conducted as early as 2007 between major banks, telecomm­unications companies and smartphone makers. Trials have also been announced by eftpos and Coles in recent years, but few have resulted in new payment methods.

BANKS ARE ‘SICK OF WAITING’

Late last year Commonwealth Bank enabled NFC technology on capable smartphones from the likes of Samsung for the first time, and launched a miniature credit card that could be stuck to the back of a phone that did not have the contactless technology.

CommBank chief information officer Michael Harte told The ­Australian Financial Review at the time that the bank had become sick of ­waiting for manufacturers like Apple to make the capability available to users.

“The device guys want to close the ecosystem in their favour. It’s not on. And we’re not going to be beholden to device manufacturers when our ­customers have the right to choose whatever device they want,” he said.

Apple is long-rumoured to be ­developing its own payment methods but has yet to publicly announce a clear strategy.

Phil Gomm, director of banking, cards and payments industry at ­technology consultancy Capgemini, said years-long attempts to formulate profit-sharing agreements between ­telcos, banks and manufacturers had ultimately been abandoned, forcing payment providers to create their own solutions.

“All participants have been worn down by industry stubbornness in terms of being able to facilitate innovation,” he said. “All further trials are supporting the proposition that customers are ready to take up the technology.”

Despite the beginning of fervent reception to virtual wallets, however, 77 per cent of those surveyed said they believed there would always be a need for cash.

“For some customers it won’t appeal – they’ll continue to use their wallet and it’s fine,” Mr Sullivan said.