As global commerce goes online and more transactions become electronic, various technologies and solutions have emerged that are disrupting the way consumer commerce is taking place. And its not just about replacing bank notes and coins with credit cards. These technologies are challenging the need for people to carry wallets as they eliminate the need for multiple credit cards, and certainly bank notes.

Given the processing power of mobile phones, and the innovations in the form factors as well as the apps in the mobile eco-system, it was a matter of time when cash as well as credit cards moved to an app on your mobile phone. In the not-so-distant past, we have seen loyalty cards – which were a rage in the late 1990’s and early 2000’s – disappear. Physical cards, which were a pain to carry, were replaced by online versions of loyalty programs and apps & services which helped brands manage their loyalty programs, as well as add significant value by cross-linking benefits redemptions across multiple brands.

Likewise, a number of companies are working on solutions that provide a comprehensive and, most importantly, secure way of concluding retail transactions electronically using your mobile phones or other wearable devices that are disrupting current hardware and usage patterns.

Given the size and scale of the opportunity, and the deep need for security and reliability, this is a game for the big boys. But as always, garage startups and technology companies are throwing their weight into the ring. Who knows, the leader in the payments segment may not have been born yet. The search for more efficient online & digital payment solutions have led to some interesting developments. While the giants in the traditional payments eco-system – PayPal, MasterCard, Visa, etc., who are investing heavily in electronic payment innovations and technologies, the most talked about innovation in the electronic payment space is from Starbucks, who created a mobile wallet solution to meet their own needs, and are getting requests for white-labeling by other brands that are looking for easy-to-use, secure and robust digital payment solutions.

Apart from the software, and the ability to integrate with a number of stakeholders in the complex payment completion eco-system, hardware manufacturers are also playing a big part in integrating technologies that enable mobile payments. Technologies like NFC (Near Field Communications) are likely to find their largest anchor customer in the payments industry. A few solutions are already in play e.g. solutions where consumers can pay by just tapping their phones to a NFC enabled POS. And a lot more are being tested and thought about.

Clearly, the battle royale has not yet begun. And while there are early-movers, the winners or leaders have certainly not been declared. While giants in the traditional payment space have a strategic advantage. But the space is wide open for new players to disrupt the market.

The question is not whether your wallet will be replaced by an electronic or mobile wallet, the question is how soon. Watch this space!!!!

Oops…watch indeed. A watch may just be your next wallet.

UPDATE – And I knew that I did not say it too soon !! Please do check this link – Pay with your smart watch