Are virtual wallets and mobile payment solutions the way of the future?
In June, Gartner estimated that mobile payment transaction values would reach
$235.4 billion in 2013. By 2017, Gartner expects the value to swell to $721 billion.
This is exciting, but there are some things that consumers should know before they join the virtual wallet revolution. Read on to see which one is right for you.
Google Wallet
Google Wallet is one of the most hyped mobile payment systems on the market.
The app allows users to store loyalty cards from various retailers, send money to family and friends, and buy items instantly on mobile websites.
Those are nice features, but Google Wallet's main draw is that it allows users to store credit cards in their phone, creating a virtual "wallet."
Hundreds of
thousands of merchants are supported, but Google Wallet has a long way to go before every consumer can use it at every location.
Google Wallet users receive 24/7 fraud monitoring, as well as
purchase protection that covers 100 percent of all eligible unauthorized transactions.
Better still, users can disable their phone and/or credit and debit cards within their Google Wallet accounts. This could be helpful in preventing a problem after it happens, but it wouldn't be effective in stopping the
Target data breach.
Related:More Bad News For TargetPayPal
PayPal is a massive force in e-commerce, so it's no surprise that its mobile payment solution is catching on with consumers.
The company offers a familiar set of features for mobile users, who can link their bank account or debit/credit cards to their PayPal account. From there, users can shop with
a single tap at participating merchants.
One of the more unique PayPal features is that it allows users to pay ahead at select retailers.
The best feature has more to do with security than transactional convenience, however.
David Kennedy, founder of TrustedSec (an information security firm), recently explained why virtual wallets are such a cool concept. He told
Fox News that PayPal offers a "one-time credit card number where basically you use a credit card once and then it changes the number again."
This could have theoretically allowed customers to sidestep the Target fiasco.
Square Wallet
Square is the official credit and debit payment solution at more than 7,000 Starbucks locations. Not counting Starbucks, the company processed
$10 billion in 2012. Square is expected to process
$15 billion through the end of 2013.
Merchants like it because it provides them with a cheap alternative to traditional PoS (Point of Sale) terminals. Consumers like it because it's quick and easy.
While not all supporting merchants are
set up correctlybrags about this data being stored "securely on Square servers" instead of a user's device. But if the company is ever hacked (a la Target), the results could be catastrophic.
Related:Jack Dorsey's Hardest JobLoop
Loop is an entirely different take on mobile payments.
Instead of using NFC (Near Field Communication) or some other familiar technology, Loop uses an add-on device (a Fob or a smartphone case) that can interface with 90 percent of retailers' existing Point of Sale terminals.
In October, Loop co-founder Will Graylin
told Benzinga about the product.
"We solved a very tough problem, which was, 'How do you get the phone to talk with the existing point of sale without having to change the point of sales out there?'" he said.
Like most virtual wallets, consumers can load their loyalty, credit and debit cards, which are protected by a number of
security measures.
Unlike PayPal, it does not appear that any of those measures could have allowed a user to sidestep the Target data breach.
Loop is currently available for
pre-orderAt the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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