After all his warnings about home equity loans, HELOCs, and household debt, Finance Minister Jim Flaherty might be encouraged by the news that credit cards are on their way out. But the relief will only be temporary, as plastic will simply be replaced by another way to use credit – a simpler, faster way for us to spend money that we don’t yet have.
That way will be called the mobile wallet, and it’s an innovation created by the Canadian Imperial Bank of Commerce and Rogers Communication. The technology uses a scanner to scan cellphones embedded with a microchip. Upon purchase, the cellphone owner would simply tap their phone against the reader, and the reader would then use the microchip to transmit information from their banking account to the retailer. The scanner and microchip will simplify purchases, allowing customers to pay with just one tap or bump, rather than swiping and signing. But while Rogers and CIBC are the first to think of it, Telus Corp. is hot on their heels, coming out with their own technology to use in their phones.
The news is good for those in the technology sector who thought in 2010 that Canada wasn’t keeping up with digital payments the same way other countries around the globe were. After all, the ‘tapping’ method of payment has already proven to be hugely successful in Europe, Asia, and the United States.
And it’s good news for banks and mobile providers. When they have more options to give their customers, they get more business and so, the mobile wallet could prove to be a good thing for the economy. But that’s only if consumers are very, very careful.
It really is bad enough when we can just reach into our wallets and pull out a debit or credit card to pay for something that we really can’t afford. But taking cash out of the equation altogether, and making it far too easy to pay for purchases could mean disaster for those that are trying (unsuccessfully) to control their spending habits. Plus, consumers also have to be very wary of the extra costs and fees their bank could charge them for the use of the mobile wallet. Just like ATMs and Interac, the mobile wallet could come with some very costly fees – especially those that are applied every time you use them.
So is the mobile wallet good news for the consumer? It really depends on where your finances stand and really, how good you are with money. Something tells us though, that Finance Minister Jim Flaherty isn’t so happy about the new mobile wallet.