Mobile wallets coming to smartwatches and smartphones, but Australians remain nervous

SMARTPHONES and smartwatches are preparing to kill off the wallet, with new technology letting you tap them at the cash register to make a payment.

Apple senior vice-president Eddy Cue demonstrates the new Apple Pay mobile payment system last year

THERE is a little known feature inside Samsung’s newest smartphone that could change what you carry every day.

For the first time, Samsung has built a digital wallet into the phone’s settings, letting users nominate a bank and use the Galaxy S6 as a debit card.

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But the wallet-killing trend will not be restricted to this phone, or any smartphone, for long.

A major Australian bank is in the final stages of testing Apple and Google smartwatch apps that let wearers pay for goods with a tap of their wrist.

Phones as wallets ... Apple Pay lets US users pay for goods with their iPhones.

One phone carrier also plans to launch its own smartwatches for the same purpose, and Apple is tipped to weigh into the Australian market soon, boosting acceptance of mobile payment technology.

But telecommunication experts warn Australian consumers “have more concerns about mobile payments than anticipated” and providers will have to quell their fears as well as selling them on the convenience of tap-and-pay gadgets.

Despite Google, Samsung and Apple mobile payment services announced for the United States, Australia’s mobile payment market remains in its infancy.

Apple, which launched Apple Pay in the States last October, has yet to announce a local launch for its smartphone and smartwatch payment service, though research company Timetric predicts the country is on its shortlist.

“Countries with a high proportion of iOS devices, including Canada, the UK, Australia and Switzerland seem to be obvious contenders,” payments lead analyst Vladimir Vukicevic says.

Tap and go ... Commonwealth Bank offers tap-and-pay services in some smartphones.

Samsung’s similarly titled Samsung Pay technology, unveiled at Mobile World Congress, is due to launch in the United States and South Korea shortly.

But Samsung Australia mobile vice-president Prasad Gokhale says the company is unlikely to launch the payments solution in Australia in the same form, instead negotiating with individual banks and credit unions to bring their services to mobile devices.

“We are working with institutions to make it relevant for an Australian audience,” Gokhale says. “We are not about ‘here is our solution — take it or leave it’.”

The result of Samsung’s collaborations can now be used by Samsung Galaxy S6 and S6 Edge owners, with Commonwealth Bank’s tap-and-pay service available inside the phone from launch, and Westpac adding its digital wallet service to the phones late last month.

Both services use the phones’ NFC chip and users can nominate their preferred financial institution from the its menus.

The Commonwealth Bank allows users to set up the phone as a virtual Debit MasterCard, opening its app and tapping it at any contactless card reader to make a payment.

Westpac customers can set the phones to act as a Visa, MasterCard or American Express credit card, or Debit MasterCard.

Coming soon ... the Commonwealth Bank's app for Android Wear smartwatches will let users pay for items without a wallet.

But the technology will soon expand to smartwatches in Australia.

A Commonwealth Bank spokeswoman says the bank is in the “final rounds of testing” for Apple Watch and Android Wear smartwatch apps allowing “cardless cash” payments from the wearer’s wrist.

Australia’s second largest mobile telco, Optus, says it is also on track to deliver payment-ready smartwatches and a smartband by Christmas that wearers can use as a debit card for transactions up to $100.

All of these mobile payment services will benefit from Australia’s eager uptake of tap-and-pay terminals, with the Australian Payments Clearing Association reporting “per capita use of the product” in Australia is “the highest in the world".

But Telsyte managing director Foad Fadaghi says its widespread availability may work against mobile payments, as consumers could feel less motivated to reach for their phones when their debit and credit cards use the technology.

Contactless cards ... Australia leads the world in contactless card use. Photo: Mike Burton.

Despite Australia’s reputation as a national of early adopters, Fadaghi says Telsyte’s surveys show consumers are also worried about the security of mobile payment technology.

“There's a fear of physical security as it relates to phones,” he says. “While people keep their wallets close, they often leave their phones lying around.

“You don’t see people leave their wallets lying out on a restaurant table — they keep their credit cards nice and safely filed away in their wallets.”

Fadaghi says some Australian consumers do want “the simplicity of not carrying a wallet or cash with them,” however, and Australia may simply follow the lead of other nations on mobile payments, “rather than leading” the trend.