Will smartphones replace wallets?

Smartphones may still be lagging when it comes to taking over the virtual payments business, as evidenced by two companies this week.

Square, a San Francisco-based mobile payment company, was valued at $3.25 billion in its latest fundraising, reports Richard Waters of Financial Times. However, that’s a huge feat for a start-up company that has annual revenue of $200 million, and is battling banking, retail and mobile giants.

Read: Govn’t introduces mobile payments guidelines

Further, its payment app is designed to let a consumer make a purchase without even pulling out a phone—a system that most retailers have yet to adopt.

Also, there’s Apple’s Passbook—a virtual wallet that allows customers to store loyalty cards, discount coupons, gift cards, and tickets. However, it doesn’t allow consumers to actually make a payment. Apple, instead, is betting on the fact that consumers still prefer to make a payment using a card or hard cash, writes Waters.

The bottom line is that consumers now have choice because there are already virtual options available—and likely more to come—should they choose to ditch their clunky wallets.

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