• Predictions for the Future of Electronic Wallets

    When I was a kid, my dad told me the story of when the first modern grocery store opened in his town. This was the first store with long aisles for shoppers to walk down, pick what they want to buy off the shelves and pay for them at the cash register at the front of the store. Before this, grocery stores were small and everything was behind a counter. You’d ask the clerk for the items you wanted, he’d gather them for you, and you’d pay right there. The new store’s shopping experience is exactly what we’re used to today, but at the time, my dad wondered, “what’ll keep people from just walking out with stuff?”. In a small store, the counter makes it easier for a single person to maintain and manage it. But my dad had internalized an unintended implication of the counter: that shoppers couldn’t be trusted to pay for their groceries.

    Yesterday’s announcement of Google Wallet marks the beginning of a transition to an cloud-based smartphone-enabled wallet we’ll someday all be carrying. There are lots of exciting implications for this shift. It isn’t hard to imagine waving your smartphone over a sensor instead of swiping your credit card at checkout. An electronic wallet could do away with plastic cards altogether. Good riddance.

    Electronic wallets simplify person-to-person and small business transactions as well. You can bet the folks at Square are working to get rid of that dinky headphone-jack credit card reader they give their users, in favor of just tapping two smartphones together.

    The greatest implication to commerce I see is the redefinition of our experiences in retail spaces altogether. Imagine no cash registers at all. You walk around a store, choose what you’d like to buy, and walk out. The exit detects the RFID signature of the items and your smartphone is automatically charged. That’s it. But what would keep people from just walking out with stuff? Consider the Apple Store today, where the cash registers in the back do nothing to compel visitors to pay before they leave. The only things doing that are the friendly security guard, sensors by the exit, and human decency. I’m sure people try to steal stuff sometimes, but I argue that the lower-friction buying experience is worth the potential risk.

    I predicts more stores will go this route and eventually try even lower-friction buying models once electronic wallets (and RFID-tagged products) become ubiquitous. I’m not sure exactly what those models will be, but less than a generation from now, the idea of waiting in line to pay at a cash register will seem quaint and anachronistic, like video stores do in the age of internet movie streaming. My dad’s grocery store didn’t need counters to keep people from stealing – and done right, I don’t think we’ll need cash registers either.

    There are 6 thoughts on this idea

    1. Mathew Sanders

      Apple stores have their own problems. A friend of mine went into a Boston store earlier this week to pick up an iPod as a gift.

      A friendly assistant asked her if she needed help, and she asked for an iPod Touch. He went away and never returned. After standing around a while another friendly assistant asked if she needed help and this time she finally got her iPod.

      Maybe they are different in SF, but in Boston Apple Stores unless it’s a small item like a keyboard or headphones you can’t walk out without paying.

      Talking about trust at point of sale, I had a surreal experience in an book store that only accepted cash when I only had my debit card. The gave me my books and emailed me a an invoice with their bank account account details where I transferred the money with online banking. It felt weird leaving with a bunch of books that I’d only promised to pay for in the future, but felt great to be trusted 🙂

    2. Indi Young

      I heard a story in March about a nanny in SF who used to go to Whole Foods every day for lunch. One day, she picked up some vitamins in addition to her lunch, and having forgot her wallet in the car, got into trouble with the guard trying to go get her money. The guard accused her of theft, detained her, and made her sign an English document admitting her crime (even though she said she could not read English that well, even being in the US legally). The point of the story was that the guard abused his power. Hopefully the scenario you outline above will eliminate this kind of abuse, because now the detector at the door will let you know when you arrive if you’ve forgotten your eWallet. And when you leave with your items, it will debit your eWallet quietly.

      ‘course, if you don’t have an eWallet at all and you want to use cash or plastic, you ought to be able to still walk into the store and not get treated like a second class citizen by a wary guard.

    3. John Labriola

      I think you’re dead on with the walk around and walk out model. We’re getting closer and closer to it.

      The not stealing bit is cultural. I worked retail for over 6 years in the 90s. When I first started we always had people trying to steal in some form. Bt we didn’t go on to suspect everyone. As the economy improved, we notice less stealing. This was in the NYC area. Anyone who’s lived there since the 80s can tell you there’s been a cultural change. There’s a lot less thievery then there was.

      One check, somehow people have to be able to easily check the final purchase before walking out. How many times has the price not been the same as on the shelf 😉

    4. Jason Ball

      A decade or so ago, I went to a seminar on e-money where one of the speakers speculated whether in the future, private companies would launch their own currencies. Google Dollars anyone?

    5. allan

      thank you for not adding my comment. u are an ass.

    6. GNLD

      This sounds like a great idea but we all have to admit that not everyone is capable of having an iphone. I guess they should first plan this more, in a way that would be available to the public.

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