Wallet in the Cloud

Audrey M. Jones
Fluffy clouds

Recently, software engineers and developers have turned their sights to consumers' wallets. This doesn't mean that they're trying to sell something, but instead that they have designed a way for consumers to purchase items using cell phones.

What Is a Wallet in the Clouds?

The term "wallet in the clouds" refers to a virtual wallet in which your credit cards, medical information, coupons and anything else you have in your actual wallet is contained in an electronic database. Usually, this database is off-line, meaning it is not directly connected to your computer, but rather to an invisible database managed by the provider. The fact that the information in your wallet "floats" to an off-line database and is able to be used wherever you are gives it the name: "wallet in the clouds."

This wallet's specific purpose is to facilitate digital, electronic payments anywhere in the world. To do so, it uses software called "Near Field Communication," or "NFC" for short. NFC allows you to hold your phone up to a payment system, choose your method of payment and remit the amount you owe electronically. You do not have to provide a tangible credit card for the seller to swipe or sign any paperwork after making your purchase.

What Can I Put On the Wallet?

In theory, you can put anything you want in your wallet. The most common components a wallet in the clouds can handle are credit cards, debit cards, passports, driver's licenses, social security numbers, gift cards, loyalty or membership cards and medical information. You can also link bank accounts, both checking and savings, to them.

How Do You Use It?

First, you must enter all the information in your wallet into the software program. You can only use your wallet where the seller or credit processing company, such as MasterCard, allows you to do so. This is commonly shown through a sign, barcode or other mark indicating that electronic virtual payments are able to be processed.

To use your wallet, you hold your phone up to the sign and click the camera button. This triggers the wallet, which then opens and asks you for a password. After you enter your password, you are asked to identify which payment type you would like to use. Once selected, your wallet processes the transaction. You are emailed a receipt for your purchase.

What are the Benefits?

A wallet in the clouds allows you to process financial transactions easier and faster. It essentially permits you to remit electronic payment for in-person transactions. Additionally, you can even transfer money to another individual merely by holding the phones close together.

Another benefit is that, by having a distance server contain all of your information, it is unlikely that your information will get lost. This is because these servers often have more advanced protections than your computer at home.

Finally, a wallet in the clouds allows you to lighten your pockets. By condensing everything onto your phone, you may no longer need to carry multiple cards or other information with you.

What are the Drawbacks?

Currently, one of the biggest drawbacks to using a wallet in the clouds is that not many sellers accept it as a method of payment. Therefore, despite having set up your wallet, you might find it largely unusable. This, however, is anticipated to change as soon as 2013.

Another drawback is the possibility for theft of your private information. Despite having two sets of password protections, both before you authorize a transaction and in the company's establishing protections on the software program, it is still possible for someone to steal the information in your wallet.

Finally, there are reportedly problems with system updates. Many times, upgrades may not be compatible with the information you have already entered. This means that you may need to reenter your credit card or other information before being able to use your wallet.

Who Offers this Product?

Most companies developing this product anticipate releasing their wallets in the fall of 2011. These companies, however, have provided a general overview of their products' capabilities.

  • Google Wallet: This program, which is currently on the market, allows users to use their phones to "tap, pay and save" on their purchases. It also provides users with coupons and downloadable loyalty cards. It only works with Sprint Nexus S 4G phones, but supports Google prepaid cards and Citi PayPass accounts. It is free to download.
  • PayPal for iPhone: This application can be downloaded from the iPhone app store. It works as a digital payment system from PayPal accounts for iTunes or other purchases.
  • PayPal Wallet in the Clouds: This program is anticipated to be released in the winter of 2011. It will work as a traditional "wallet in the clouds", by permitting individuals to point-and-pay for any product directly from their PayPal account. It will operate similar to the company's current telephone payment system.

Getting Your Wallet in the Clouds

If you are interested not carrying a tangible wallet with you and being able to pay for everything using your smart phone, consider changing to a wallet in the clouds system. Most of these programs will be free to download and use, but may not be accepted by all merchants.

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Wallet in the Cloud