Spending: Turning your smartphone into a mobile wallet
2. It's not just about the money. Some mobile wallets store your loyalty cards and reward accounts. With Google Wallet, you can automatically redeem discounts stored in the app when you tap your phone to pay at some Macy's and Old Navy locations. Apple's Passbook app lets you organize items such as coupons and movie tickets, and pull up an item you need to your screen, such as an airline boarding pass.
3. Your data is more vulnerable. Sign up with your carrier (or load a security app) for a service that disables your phone remotely if it is stolen. Before you use any mobile-payment app, research its security protections carefully. Safeguard your phone's home screen and your wallet app with separate PINs, if possible.
4. Now for the fine print. A limited number of merchants accept mobile transactions (and those that do may or may not support your method of payment). Plus, your carrier may not offer handsets that support the technology. For example, Sprint is the only major wireless carrier with a selection of devices that support Google Wallet. Sorry, Apple aficionados: The iPhone doesn't yet support NFC.
5. Are we there yet? Tech experts are predicting that swiping or tapping a phone to make purchases will become mainstream over the next decade. But consumers still seem to be satisfied with their low-tech, analog wallets, given the current lack of streamlined payment options that work everywhere and on any phone. And items such as driver's licenses and insurance cards haven't gone digital yet, notes Michael Katz, professor of economics at the Haas School of Business at the University of California at Berkeley. He suggests that bonuses and sweeteners -- such as an automatic discount on, say, every fifth cup of coffee you buy at your favorite shop -- would enhance the value of mobile wallets for many consumers.
(Lisa Gerstner is a staff writer at Kiplinger's Personal Finance magazine. Send your questions and comments to firstname.lastname@example.org. And for more on this and similar money topics, visit http://www.Kiplinger.com.)