When NFC technology was first unveiled, it was hailed as the closest we had to Star Trek technology. Near field communication is a communications protocol, or a method of “speaking”, that allows machines to talk to one another. You can think of it as wireless for device-to-device communication. Like its own network.
It was originally one of the safest methods to pass payment information across a payment gateway, but digital wallets that utilized this technology failed to gain adoption. There are many reasons why: the technology was beyond its time for the time it was used, and consumers didn’t understand the encryption behind it.
Digital wallets are actually one of the safest methods to move money from one account to another in the modern economy. The only real risk to the consumer is physical loss of the device, misplacing your phone or having it physically taken from you.
With strong encryption on the device itself, the user will have little to worry about from the average thief. Considering most of us keep our phones well protected, and the devices utilize a form of low-power Bluetooth to anonymously pass payment data, digital wallets feel relatively safe and secure.
In addition, accounts are persistent. You’ll have the ability to lock an account down from anywhere you can find an Internet connection, in the unlikely event fraud does occur, and you’ll be able to limit the funds placed into that wallet.
Digital wallets may replace cash entirely one day, but it’s unlikely all merchants will stop accepting cash. Cash represents a liability to keep on hand, but it’s still the fundamental currency of the US. In the future, however, developing and modernized nations will rely on these fund transfers to pay for goods and services around the world.