'Digital wallet' will transform smartphone, and how we spend

Digital wallets are on their way to replacing their leather counterparts for many Canadians within the next two years, according to retail and communications specialists.

One thing it could change, for example, is your morning coffee ritual.

David Robinson, vice-president of emerging communications at Rogers, envisions a Tim Hortons application that would know you always order a large double-double, track your location via GPS and charge your bank account before you’ve even set eyes on the restaurant.

"Then," says Robinson, "you just pick it up in an express window."

The smartphone-enabled wallet also allows consumers to purchase items simply by tapping their phone on a pad at the cash, much like a tap-and-pay credit card.

Those cards only deal in transactions, but the possibilities for digital wallets could be endless.

Big players such as Rogers, Visa and PayPal are backing the new technology, signaling its rise in the near future.

The list of digital wallet capabilities is long.

'Every carrier and bank on the planet wants to be able to do this.'

—David Robinson, vice-president of emerging communications at Rogers

New to the city and need a transit pass? You could simply purchase a pass on your phone and go. Access cards for your office building could be there, too.

Receipts would be stored in the phone, and so alleviate many of the headaches of the return line.

The way consumers buy alcohol or cigarettes would also change, as patrons could simply tap their phone on a pad at the cash to indicate their age to a clerk.

It could even bring sweeping change to the way health-care identification works, as provincial health cards could reside on a phone in the same wallet.

Test results could be emailed or explained to patients over the phone, eliminating many types of follow-up visits.

Stolen, copied or forged plastic health cards would be a thing of the past.

The digital wallet is a virtual representation of the real thing – except it resides in a digital device.

A wireless signal known as near field communication (NFC) is at the heart of the innovation, where a chip in the device sends a signal from the phone to a payment terminal.

Robinson says Canada is uniquely ready for digital wallets because the infrastructure is more developed here than in most countries.

As well, Canadians are in the top four in the world for smartphone usage and often have the latest and greatest devices.

Mobile payments and digital wallets are top of the development heap, says Visa Canada's Derek Colfer.

"There's lots of conversations occurring between mobile network operators, device manufacturers and banks," Colfer says. "There will be a plethora of digital wallets for consumers to choose from within the next 24 months."

Visa believes that once the retail backbone is established the rest will follow.

Rogers' Robinson says that in a few years digital wallets will be as common as a camera is on a cellphone today. "Every carrier and bank on the planet wants to be able to do this," he says.

Still, according to a report in December 2011 by the Task Force for the Payment Systems Review, Canada is still not yet where it needs to be for digital payments.

The review, commissioned by Finance Minister Jim Flaherty, says that Canada has not yet implemented a digital authentication process that is both safe and easy to use — something that industry players are pushing to rectify.

The review also states that Canadians rely too heavily on cheques, and that financial institutions could save $600 million a year in cost savings by 2020 under a digital payments system.

The seeds of digital wallets have been sown already — Google and PayPal have versions set up for payment. Visa’s digital wallet works on some LG, Samsung and BlackBerry phones for direct payment, including the BlackBerry Bold 9900 and 9790 models, as well as the Curve 9360 and 9380.

Robinson says RIM is the most aggressive but many handset manufacturers are developing the technology.

Other phones that are already NFC-capable include the LG Optimus LTE, the HTC Ruby, and Samsung's Galaxy S II.

Apple is curiously absent from the list – but many expect the company to include the feature on its next phones.

"Apple is very aggressive in patents in the category," Robinson says. "They've filed all sorts of patents around NFC. So looking at that would indicate that they're going to do something."

Every developer says security is a huge issue for consumers.

Research conducted for PayPal Canada found that 43 per cent of people don't trust their smartphone to keep their personal information secure, and more than 80 per cent worry about financial privacy while making mobile transactions.

But the developers of digital wallets believe they will be even more secure than traditional ones.

"If there is a transaction that occurs on an e-commerce site that you didn't make, you will not pay for it," says Colfer.

And no need to panic and call a dozen card issuers if your digital wallet is lost.

"One of the services we'll provide as carriers is we'll inform all issuers simultaneously that the cards have been compromised, and then issuers will be able to lock those accounts," Robinson says.

Then, new phone in hand, a person could piece their wallet back together just tapping on a screen and making some phone calls from an NFC-capable device – a much quicker ordeal.

Smartphone providers won't have detailed credit card information. Instead, they'll have a record that an account exists on a particular device.

"When we put a card in secure memory, no one has access to that information other than the issuers," Robinson says.

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Samsung to use smartphone success to expand tablet presence

If the length of press conference lineups at the Consumer Electronics Show are anything to go by, Samsung is one of the hottest gadget makers going right now.

On Monday, the South Korean company had to turn away hundreds of journalists who were hoping to catch a glimpse of its latest televisions, phones, tablets and appliances, simply because there wasn’t enough space to accommodate them all.

The company used the event to claim market leadership in a number of product categories, including smartphones. Samsung Canada president James Politeski later sat down with CBC News to elaborate on the company’s present and future in this country, as well as overall trends in the electronics business.

CBC News: Can you explain how Samsung calculates its leadership position in smartphones? Some numbers give that position to Apple.

James Politeski: The number we count is units, so 300 million phones [shipped] makes that the largest quantity of phones in the world, as measured by the various reported sources of information. We are the largest in units.

Q: And is that number reflective of Canada as well?

A: Yes, in 2011 we had a dramatic increase in our business [in Canada], more than two-and-a-half times the market share from the beginning of the year to the end of the year. In the last few weeks of 2011, from our industry sources, we were No. 1.

Q: One area in which Samsung hasn’t done well is tablets. According to some estimates, Samsung’s market share in Canada is in the low single digits. What’s happening for you there?

A: Last year was our start, our first foray into them. We obviously have an opportunity to grow that business. One of the concepts we’re focused on is walk-at-working so that when we talk about our tablet, we want the sales associates [in stores] to actually demonstrate how it works, get a Gmail account set up so you can connect to Android and download a couple of apps.

With the tablets playing off the success in phones, that momentum is also going to play through because the feel and the systems are very similar. As our smartphone business continues to dramatically expand, that’s going to raise the tablet business.

Q: There’s talk that wireless carriers don’t like Apple so they’ve pushed Android phones, hence their success. But with tablets, people aren’t really buying data plans for them, so carriers aren’t pushing them. Are tablets a harder market as a result?

A: Everything we do has its elements of challenge to it, but having said that, they’re very different products. Phones are just that – they’re communications devices. They have similar features, but tablets are mostly Wi-Fi, so it’s not so much that [carriers] aren’t interested in them, but they’re fitting a different profile in the marketplace.

I don’t think it’s any harder for us, but what’s attracting success for us is not only the operating system but the quality of the products. Whether it’s the quality of the screen, the battery life, the product speaks volumes for what you can expect for it. Android is catching on globally and locally, but really it’s the product that we’re most excited about.

Q: There’s a benefit to a person getting all of their gadgets – TVs, tablets, phones and so on – from one manufacturer, but it’s obviously unrealistic to expect many people to do that. How do you draw the line between making your products work better with each other and getting them to work with those of other manufacturers?

A: We’d obviously like people to have a full assortment of Samsung products, but practically speaking, that doesn’t always happen because manufacturers are at different stages with different devices. The idea is there are some connectivity features that are seamless when it’s just Samsung products, but then there are examples where they just work within [a larger] ecosystem. So our ChatOn messaging app is an example – it’s an app that’s designed specifically for our stuff, but it’s going to work on all the other platforms as well. It’s not just about focusing on what we have, it’s about offering the consumer choice, because that’s what they want. We’re not trying to pigeonhole what the consumer has to pick. We’re saying, “You pick the best of what you want.”

Q: Here at CES, we’re seeing a lot of companies, including Samsung, applying new interfaces such as gesture and voice recognition to things like TVs. What’s behind this move?

A: What you see here is a giant next step. This is not a small innovation, it’s a major change in how you interact with your TV and how it participates in your life. We’ve talked about the connectivity between devices, but now we’re talking about connectivity between the human being and the TV. You’re going to see tremendous app and software development around this. As we unveil it here, it is new to the world, so it’s like a starter’s pistol.

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