Home / Technology Policy & Ethics / March 2019 / Caveats for the Emergence of Virtual Wallets

Caveats for the Emergence of Virtual Wallets

by Najee Searcy and Syed Hassan Ahmed

March 2019


As smartphones have become integrated in the daily lives of citizens of developed nations, common monetary transactions that at one point in time required the consumer to search their cars, couches, and coat pockets for spare change can now be completed with the tap of a finger on their smartphone. Examples of these situations may include paying a toll or purchasing a beverage from a vending machine. One major factor considered to be a catalyst for the shift to virtual wallets is the idea that cashless transactions are more convenient[1]. Opposing ideas to this shift in commerce trends include concerns about security, and the criticisms can be translated to the fear of putting all your eggs in one basket[2]. By analyzing the pros and cons of the of strengthening relationship between the smartphone and commerce, a clearer understanding of its limitations can be achieved.


Business Perspective

The incentive for businesses to target consumers who have linked their smartphones with credit cards and bank accounts is that it’s easier to reach the consumer. Many business models have been repurposed to exploit the current state of technological advancement surrounding smartphones. This is highlighted by the myriad of mobile applications that utilize the freemium, marketplace, and subscription business models[3].

Consumer Perspective

The are several factors that contribute to the appeal of a virtual wallet for consumers. It could eliminate the need to carry cash everywhere[2].  This may appeal to individuals who lead an active life and seek a minimalistic lifestyle. The speed at which transactions can be made may also appeal to consumers [1].


Transactions for apps are often processed, in lieu of traditional credit cards and cash, through mobile wallet applications such as Apple Pay, Google Pay, Android Pay, and others[1]. The technology behind these mobile wallet apps is known as near field communication, henceforth referred to as NFC[1]. It uses radio waves to let two devices communicate wirelessly, typically a few inches apart[1].


(Figure 1: NFC)


Business Perspective

While mobile wallet apps offer a convenient means of payment, not all mobile wallet apps receive the same support. Apple Pay, one of the most popular mobile wallet apps, see support from about 36% of retailers based in North America[2]. Instead of having one mobile wallet app supported by all businesses as a valid form of payment, many companies may see a greater value in having their own mobile wallet app. This is evident my Walmart’s practice of having their own exclusive Walmart Pay app[2].

Consumer Perspective

If a consumer were to lose their access to their phone, they would also lose their means of payment and identification. In cases of theft, the victim’s belongings are compromised as well as their identity[4]. There is also a risk when using mobile wallet apps on unsecured networks. Individuals monitoring activity, such as adding a credit card to a mobile wallet, would be able spoof card registration systems[4].


Because being in close proximity is one of the few requirements for NFC to be conducted, it raises issues about security[5]. What could one do to prevent the exchange of data between their device and a stranger’s device who happens to be in close proximity? Suggestions include turning of NFC when it is not need and “compartmentalizing” account that contain sensitive information [5].


Although there is a strong cultural shift toward the complete integration of smartphones and commerce, there are a few limitations that prevent virtual wallets from replacing physical ones. Because the market is saturated with mobile wallet apps with varying degrees of support, it is unlikely that they will able to surpass the ubiquity of cash. When it comes to security, it may be easier to take precautions against physical wallet theft than unsolicited NFC transactions.


  1. https://squareup.com/guides/mobile-payments
  2. https://www.dealnews.com/features/The-Pros-and-Cons-of-Mobile-Payment/2206421.html
  3. https://articles.bplans.com/what-is-a-business-model-business-models-explained/
  4. https://www.creditcards.com/credit-card-news/mobile-payment-security-risks.php
  5. https://www.makeuseof.com/tag/drive-nfc-hack-work/


Najee Searcy is a final year undergraduate student with Department of Computer Science at Georgia Southern University, Statesboro. His research focus is on the use of digital technologies to promote virtualization of different components. Najee is working with Dr. Syed Hassan Ahmed for his term project during Fall 2018.

Syed Hassan Ahmed (SM’18) is an Assistant Professor in the Department of Computer Science at Georgia Southern University, Statesboro, USA. He is also leading Wireless Internet and Networking Systems (WINS) lab. Previously, he was a Post-Doctoral Fellow in the Department of Electrical and Computer Engineering, University of Central Florida, Orlando, USA. He completed his BS in Computer Science from Kohat University of Science & Technology (KUST), Pakistan and Master combined Ph.D. Degree from School of Computer Science and Engineering (SCSE), Kyungpook National University (KNU), Republic of Korea (South Korea). In summer 2015, he was also a visiting researcher at the Georgia Tech, Atlanta, USA. Overall, he has authored/co-authored over 150 international publications including Journal articles, Conference Proceedings, Book Chapters, and 03 books. In 2016, his work on robust content retrieval in future vehicular networks lead him to win the Qualcomm Innovation Award at KNU, Korea. Dr. Hassan’s research interests include Sensor and Ad hoc Networks, Cyber-Physical Systems, Vehicular Communications, and Future Internet. He is currently the Member of Board of Governors and IEEE VTS liaison to IEEE Young Professionals society. From the year 2018, he is also an ACM Distinguished Speaker.


Dr. Steve Jones joined the Center for Information and Communication Sciences faculty in August of 1998. He came to Ball State University (BSU) from completing his doctoral studies at Bowling Green State University where he served the Dean of Continuing Education developing a distance-learning program for the College of Technology’s undergraduate Technology Education program. Dr. Jones was instrumental in bringing the new program on board because of his technical background and extensive research in the distance-learning field. Prior to coming to higher education, Dr. Jones spent over sixteen and a half years in the communication technology industry. He owned his own teleconnect, providing high-end commercial voice and data networks to a broad range of end users. Dr. Jones provided all the engineering and technical support for his organization that grew to over twenty employees and two and a half million dollars per year revenue. Selling his portion of the organization in December of 1994, Dr. Jones worked briefly for Panasonic Communications and Systems Company as a district sales manager providing application engineering and product support to distributors in a five-state area prior to starting doctoral studies.