Are digital wallets finally set to take off?

The rise of newfangled digital payments took another step last week, when the Manly Ferry began accepting tap-and-go credit card payments for fares.

You might ask: So what? True, it may not sound like much. But this development has got experts in the world of digital payments excited.

In an Australian-first, you’ll no longer need a NSW government-issued Opal card when paying for a ferry ride – just a credit card, smart phone or “wearable” device such as a smart watch.

The payments gurus see this trial as a milestone that will hasten the decline of cash. More interestingly, it’s also tipped to move us closer to a world where plastic credit cards themselves are the next casualty.

That’s because, assuming the technology is rolled out more widely and in other states, public transport is a potential game-changer in prompting more consumers to move into the brave new world of “digital wallets”.

The new battleground

For years, banks have been hopefully talking up “digital wallets” – using your smart phone to pay for things, by tapping it on a contactless card reader. The vast majority of us still prefer old-fashioned wallets, thanks very much.

Even so, there is convincing evidence to think digital payments that make plastic cards redundant will probably grab a bigger share of how we spend our money, and banks clearly see this as a future commercial battleground.

All of which raises the question of whether digital wallets might finally be ready to take off?

A recent Reserve Bank paper found the number of payments made with a smart phone were still tiny, making up just 1 per cent of point-of-sale transactions.

But Dr Leila Fourie, chief executive of payments body Australian Payment Network (AusPayNet), says the public transport change is important, especially when four in five Australian adults have a smart phone, and we are already among the biggest users of tap-and-go payments in the world.

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Source: Are digital wallets finally set to take off? – The Sydney Morning Herald