Apple's Passbook and Google's Wallet: Will they replace paper and plastic?

Apple's Passbook and Google's Wallet: Will they replace paper and plastic?

Summary: Are electronic wallet services on mobile devices the wave of the future? Or will physical cash and credit cards still be king when used in brick and mortar stores?



For the past several months I've tried to make sense of this whole electronic wallet thing, and people have asked me whether or not this whole concept is going to stick.

I have no freaking clue, really. Google Wallet has been out since the release of Ice Cream Sandwich (ICS) and yet the application has had virtually no impact on using smartphones as a mobile payments platform, this despite the fact that the Galaxy Nexus and a few other phones that have since launched with ICS have been equipped with Near Field Communication (NFC) which the iPhone 5 lacks.

I've had the Verizon Galaxy Nexus since its launch in November of 2011. Unfortunately, the Google Wallet software never really made it onto the Verizon version, and there are only a scant few apps which actually support Google Wallet.

I only recently started looking at Google Wallet on my Nexus 7 tablet, which is pretty much useless as a mobile wallet platform because the device is too large to be used for that purpose and it lacks a mobile data connection, being a Wi-Fi only device, even though it does have NFC and GPS.

I just started using an iPhone 5 this week as my primary smartphone, so I was intrigued by Apple's Passbook feature, which is similar to what Google Wallet does. I haven't been able to take advantage of it yet either, because there are no apps for Passbook which I would find useful yet.

My airline of choice, Delta, already has a very good standalone app called Fly Delta for both iOS and Android which gives important notifications and allows you to have smartphone-based boarding passes. My guess is at some point they will make it Passbook and maybe Google Wallet enabled.

I suppose I could test this at the Starbucks across the street from where I work, just to see how their Passbook app functions, but I hate Starbucks coffee. The stuff just tastes burned and is ridiculously overpriced. I like Au Bon Pain, Panera, McDonalds and Dunkin' Donuts coffee better.

Even the mystery grounds that the guy who stocks our break room pantry buys for our office "Coffee Club" (is it some secret blend of Chock Full O' Nuts and Cafe Bustelo?) that comes out as the magical black juice from our Bunn-o-Matic is far more palatable. But I digress.

Based on the demonstrations I have seen, Passbook also has some of the same functionality as Google Now, which gives you contextual information about what you are doing/buying/travelling based on gelocation services and other related technologies.

However Passbook is not a generic replacement for credit cards like Google Wallet is, because the iPhone 5 doesn't support NFC. But then again, I haven't seen a ton of NFC-enabled businesses either.

Passbook is going to require the buy-in of a lot of vendors for it to gain critical mass. I can see it being used for certain large payment type of things, such as for airline/hotel reservations and boarding passes, and for large companies (Such as Delta Airlines or Starbucks) and major retail players such as Wal-Mart and TARGET who have already developed dedicated iOS apps, can re-purpose code and have existing barcode scanning infrastructure already.

But being able to use your iPhone or your Android device as a virtual Mastercard or American Express at virtually every type of brick and mortar retail establishment? I have no good predictions for this one.

Something tells me that what works necessarily for ecommerce and makes people comfortable pulling out their credit cards in front of their personal computer on a web site or ordering stuff on Amazon will not necessarily work in brick and mortar.

Psychologically it doesn’t feel as secure to me even if the technology behind it is perfectly sound. A real wallet can be stolen just as easily as an unsecured iPhone or Android device, but at least real wallets don’t run out of power at the critical moment you need to make a payment or validate your purchase or board an aircraft.

Is the electronic wallet the future of brick and mortar shopping, or simply a fantasy? Talk Back and Let Me Know.

Topics: E-Commerce, Android, Apple, Google, iOS, Mobile OS


Jason Perlow, Sr. Technology Editor at ZDNet, is a technologist with over two decades of experience integrating large heterogeneous multi-vendor computing environments in Fortune 500 companies. Jason is currently a Partner Technology Strategist with Microsoft Corp. His expressed views do not necessarily represent those of his employer.

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  • Apple's Passbook and Google's Wallet: Will they replace paper and plastic?

    Nope. Its just a lot easier to open your physical wallet, pull out the plastic card and swipe it and be done with the transaction. NFC has its uses but payments isn't a good one.
    Loverock Davidson-
    • Not Often Agree

      But I see solutions like this as a hackers dream.
      Alan Smithie
    • I have to agree with you on NFC

      it may make a nice backup to traditional cards, but as a primary souce of payment? Not in our lifetimes.

      too few people use or trust it, the majority don't own a smartphone with that capability, the merchants need to be on board with their terminals: In short, too many factors to make it the norm going forward.
  • Unfortunate truth

    Wallet and NFC - use it on my gNexus all I can. The list of vendors is growing. Unfortunately the growth is sporadic :-(

    Passbook I am trying and having very limited success. All to often the vendors app or email will scan while passbook will not. (DD coffee is better ;-) ).

    Do i see it replacing my cards? No anytime soon.. It would be nice to see though.
    • Passbook is only out for like three weeks

      However, it already has all of the biggest trade chains of USA in it.

      Yet for really best use scenarios it has to incorporate thousands of developers/chains/businesses. It will require few months.
      • Infancy Yes

        Will Passbook ever actually function as a wallet? I have found there are better apps for reward cards.
        What we need is a cross OS app you can use on Android, iOS, MS, and Rim.
  • Dwolla

    I've been using Dwolla... seems good to me.
  • The promise is there...

    ... but like you said none have gained critical mass yet.
    I also see something like passbook being less costly for businesses to implement.
    I disagree with a poster above that said taking out your wallet is easier than using your smartphone. My wallet is full of cards, credit, debit, coffee-shop fidelity cards, favorite restaurant cards etc.
    I'd love to consolidate all that with an app in my phone.
    • The security isn't there, either

      Time will tell... but right now, things are done as quickly and dirty as possible, with no concept of mid- or long-term ramifications. I wouldn't trust... and it gets harder to trust every time you try and get betrayed.
  • Probably not (but they should)

    Either of them could, and should, succeed. To do so would require the ability to store any credit or debit card, discount card, etc. But these days, every business wants to lock out every other business, regardless of the effect on its customers.

    I had Google Wallet on my Nexus phone, and a couple businesses here accepted it. I got a few free doughnuts and coffees, and I have to say the process was easy, fast, and painless. And I had to answer a lot of questions from curious clerks, which was kind of fun.

    But: I couldn't use my debit card with it. That sucked, 'cause when my ten bucks was spent, I had to go back to paper or plastic. I don't have a Citibank card, the only card that Wallet would accept.

    Until the customer can load his/her debit and credit cards, regardless of issuer, it won't fly. (Sorry, Google. I love you and that, but I but I have to speak the truth as I see it.) I've never used Passbook.
  • Passbook will supplement financial transactions-not replace them.

    Walgreens and Target Passbook cards are on my iPhone now. I can see the day (soon now) where a user's smartphone becomes the interactive vendor barcode sales assistant.

    Instead of having all those keychain merchant scan code cards "hiding my car keys", my iPhone Passbook app will contain them. I may still pay with cash or plastic in the future but Passbook will help get me my coupon discounts.
    • What happens if the phone breaks or dies?

      Something that doesn't happen with a plastic card.
      • Ever try to remagnetize a defective credit card magnetized strip?

        Of course credit cards break.

        Well .. I actually do see your point. Once upon a time, a credit card was just a piece of plastic that could only get lost or damaged in use.

        Credit Cards have evolved to a point where they can "die" or "break" over time just like smartphones.

        But come on .. electronic transactions will take all manner of forms - now and in the future. They won't eliminate ALL other financial transfer methods. I hear people still use "paper checks" from time to time.
  • I don't want either ....

    .. to replace money or credit cards.

    What I would like is not to have to carry around a 100 cards to get discounts. A digital wallet that is nothing more than a scannable version of all the discount cards is what I really want.

    Cards that if lost have little value and can be replaced by just downloading the barcode image.
  • It's just the first step

    to the future where we all will have 'credits' rather than money and a chip in our hand that we will wave at some sort of device to pay.

    Well, I say 'we' meaning my grandkids.

    On a serious note, I don't use rewards cards but I can see the usefulness if I could use my debit/credit card app rather than the card. But until every merchant is on board it will require everyone to still carry both phone and cards. It most certainly will take a few years. And the security will have to be very tight for people to trust it.

    However, I'm 61 and very well remember when many merchants didn't even want to accept checks and few people had credit cards (debit cards weren't even on the horizon). Eventually I believe this will happen. Just like it has with debit cards.
  • Plastic, maybe. Paper, nope.

    Plastic, maybe. Paper, nope.

    First and foremost: Let me point out that even though plastic could hypothetically replace paper, it didn't.

    The reasons?

    Well, there are a few I can think of:

    1) Paper works all the time, everywhere. Even in the case of something like a power outage or a broken phone, it still works.

    2) It's cheaper for certain industries. For example, designing a vending machine to accept credit cards and NFC requires adding radios and networking equipment to the machine, while designing one that accepts cash usually requires a simple coin detector.

    3) It's required by law for anybody who manages debts. Paper money and coins are considered to be legal tender for all debts. If you want to pay your debts with bills and coins, then legally speaking the bank can't force you to use something else.

    4) It's a way to control the economy. By printing more or less money, the government has some control over the rate of inflation.

    5) It's still convenient. No need for PINs, signatures, logging in, or saying "I Accept." Just pull out the bills and start paying.

    I see NFC and Passbook as possible contenders for replacing credit cards, but not for paper money and coins.
    • Ordinary wallets are a lot cheaper than smartphones.

      and they need to be upgraded far less often.
      • Wow!!! What an imagination

        So according to you, the tech needs a "smartphone" to replace the data.
        • You put words into his mouth

          Ordinary wallets don't need replacing every 2 years... neither do standard plastic credit cards...

          If you can trust the technology inside a smartphone, and think iTunes and Android will never be hacked... forgive me if I start laughing, with my pet parrots backing me up with their parroting my laughter... it makes for a really cool chorus...
          • +1.

            perfect and fitting reply.
            Ram U