ISIS, a wireless Mobile Payment System to be launched this summer, is yet another step towards a cashless society, introducing mobile wallets, a joint venture created by three major mobile operators, Verizon , AT&T, and T-Mobile USA. A mobile wallet will be part of a user’s mobile device, allowing for a more timely and “highly personalized” shopping experience. The technology would allow a customer to check-out at stores by merely tapping or waving their mobile phone over a payment reader. It would hold account information, credit cards, gift cards and loyalty cards, and be a two-way communication between customers and financial institutions, as well as marketers, offering promotions, coupons, and alerts about products related to past purchases.
Mobile wallets use Near Field Communication technology that would allow mobile devices to send account information to payment readers and other points-of-sale, as well as read RFID tags placed in advertisements on checkout counters or posters around a store to acquire reward points and coupons. With 1.3 billion active credit and debit accounts and 5.3 billion active mobile phone accounts worldwide, mobile wallets could quickly overtake traditional card-based payment methods. In Korea, over 63 percent of people have made a mobile purchase, with global usage of mobile payment growing by about 50 percent a year.
Although it promises convenience and even more efficient use of time, it also poses privacy and information security risks due o the “necessary” personal data collected and stored. RFID tags are already used in products sold by Wal-Mart for inventory tracking purposes. According to snopes.com, RFID tags, also known as smart labels, have been called “bar codes on steroids” because they have the following advanced capabilities:
- RFID chips can store much more information than bar codes.
- RFID chips are a read/write technology, so much more information can be added to them as needed.
- RFID chips don’t require line-of-sight proximity (i.e., the information they store can be read even when products are still encased in boxes or crates)
- RFID chips are more robust (i.e., not subject to problems caused by tearing, creasing, or alterations) than bar coding.
- RFID chips can track individual pieces of merchandise, like instead of just identifying a box of cheerios, it can identify a particular box of Cheerios and enable it to be tracked from the warehouse to the consumer’s shopping cart (my note: and home with the consumer).
The tags can be used to help keep shelves stocked with sizes and colors of clothing that consumers are purchasing most often. J.C. Penney’s and Bloomingdale’s have begun using the smart tags for this purpose, and some European companies, such as Germany’s Metro have already implemented the technology. But that is not the only thing the RFID would be doing for communications companies, marketers, retailers, manufacturers, and government. In The Mobile Wallet Revolution Motorcity Whitepaper it says:
The real opportunities will come from the ability that the mobile wallet provides retailers to deliver offers and information to customers based on who they are, where they are, what they are doing, and what they are interested in. The combination of location-based information and access to comprehensive data about customer purchasing history and preferences will enable retailers to meet customers’ needs in ways that have never been possible before. And it will help retailers recognize their valued customers whenever they are on-premises, instead of waiting for them to present a physical card when they are in the checkout line.
The potential scenarios are almost endless, but it is easy to imagine mobile wallet solutions that recognize a customer as soon as she enters a store, instantly analyze her purchase history, track her location as she moves through the store, assess possible discount offers and premiums that might interest her, and automatically deliver offers to her mobile device that can be redeemed at check out.
So who is benefiting more? The retailers, communication operators, manufacturers, and government, or the customers, who give up privacy because credit cards are too bulky, or writing a check or standing in line is just too much of a hassle these days? Although our financial and personal information can already be accessed by mobile communications companies, marketers, manufacturers, retailers, and the government due to the internet, do we really want to give them even more access? Do we want there to be a record of what cleaning products or light bulbs we purchase(environmentally friendly?) and brand of undergarments we buy? Or the frequency of yeast infections and bouts of jock itch? Prescription drug needs like anti-depressants, or anti-psychotics, which are often used for conditions other than psychosis? Historic, religious, and political literature we read, amount of food bought per grocery store visit, firearms purchased, charities supported, alcohol consumed per month, fuel usage per week, amount of condoms used in a year, or the number of adult movies rented? When does trust and convenience cross over into the realm of naivete and an invasion of privacy? And when does the invasion of privacy reach into invasion of identity?