Digital Wallet: Not Ready for Prime Time

The problem with new technology is when it does little more than replace one annoying problem with a new set of annoying problems. Even worse, some technology just adds a cool new layer on top of legacy infrastructure. In other words, it doesn’t really help you do anything any better or easier. It’s just shinier.

Take ecommerce, for example. It’s great to be able to buy stuff online, and yet, we still have to carry our big fat wallets around with us everywhere we go. And it’s not just a mobile problem, either.

My wife actually has a credit card permanently parked on the end table by the living room couch where she somehow manages to watch TV, text and email friends, read news reports, watch silly animal videos, and buy stuff, all at the same time.

None of that makes sense to me – certainly not the credit card part. And since we already carry our entire lives around on smart mobile devices, why can’t we finally do away with all the credit cards, debit cards, loyalty cards, ID cards, cash, and whatever else we’ve got stuck in our wallets?

Clearly, most people feel the same way because there are now dozens of options that offer the promise or at least the possibility of the long sought after Holy Grail of ecommerce: throwing your leather wallet in the trash. But before we explore the complex world of digital wallets, let me say this.

Much to the shame of my Silicon Valley brethren, I’m not an early adopter of new technology. The reason is simple. I’m not interested in wasting time working for technology. When it’s ready to work for me – to make my life simpler and easier – that’s when I’m ready to pull the trigger.

Unfortunately, digital mobile payment technology isn’t ready for prime time yet.

The problem is it’s a crazy fragmented world full of half-baked or partial solutions, so none are accepted everywhere or in all situations. And therein lies the rub. When one solution takes off and becomes ubiquitous, that’s when you’ll actually be able to ditch the wallet. When I see that coming, you’ll be the first to know.

In the meantime, you’re pretty much stuck having to carry your wallet around. Still, if you want to be stubborn about it, here are your options, organized by whatever problem you think you’re trying to solve by going digital:

You want a thinner wallet.

I don’t get the whole fat wallet thing. My wallet is pretty thin. I hardly notice it’s there. Some cash, a few credit cards and debit / ATM cards, a driver’s license, and not much else. All the loyalty programs I’m into use my phone number. What else is there?

But if you’re dead set on leaving all the money stuff at home, there’s an early stage startup called Coin that will offer a digital credit card that contains all the information from all your other cards. That is, if it gets enough funding to get off the ground and merchants and credit card companies are cool with it.

Wait, did I forget to mention that Coin will cost you $50 or $100 and you’ll still have to carry around the Coin card, your driver’s license, and a backup credit card and cash because Coin is tethered to your smartphone so, if you’re out of juice, you’re out of luck. And I can pretty much guarantee that will happen exactly when you need it most.

You want security and privacy.

Wait … give me a second to stop laughing. Whew, that was a good one. Look, if the recent Target (NYSE:TGT) security breach taught us anything, it’s that any card, any bank, any retail chain, any anything no matter how big or small, can and will be hacked or stolen.

The good news is your liability is limited unless you routinely use debit cards – which you shouldn’t.

In any case, nothing is more secure and private than just using your plain old wallet with as few credit and debit cards as possible and guarding it with your life. There are also a handful of mobile payment options that are about as secure as using a credit card – but certainly not more so – including PayPal, Visa’s, MasterCard’s MasterPass, and perhaps Google (NASDAQ:GOOG) Wallet.

You want convenience.

If it’s too much trouble for you to pull out a credit card or a ten-dollar bill to pay for your venti non-fat cappuccino, you can use Starbucks’ partner, Square Wallet, and just scan your phone. But you’re still going to have to carry your wallet around just in case your phone dies, so, if you ask me, it’s six of one, half a dozen of the other.

If you’re looking for travel convenience, you’re pretty much out of luck. None of the digital payment solutions available in the United States work overseas. Most of the rest of the world has gone to chip-and-PIN credit cards, so they use different readers than the ones in the U.S. that scan magnetic strips. But we’ll get there eventually.

You want assurance against a global financial collapse.

Unless you’re a drug dealer, an accomplished currency speculator, or paranoid that the global monetary system will collapse overnight, you should probably steer clear of Bitcoins. It’s a long story; you’ll just have to trust me on this one.

To sum it all up, the digital wallet market is highly fragmented because no single solution has rocked everyone’s world yet. If I had to guess what will change that, it would be one or both of the big boys: Visa (NYSE:V) and MasterCard (NYSE:MA). Of course, there’s always Apple’s (NASDAQ:AAPL) rumored iWallet (or is it iMoney?), since the tech giant reportedly has more credit cards on file, via iTunes, than any company on Earth. We’ll know soon enough.

In any case, I seriously doubt if a startup is somehow going to disrupt the entire mobile payment industry.