Replacing your wallet with a smartphone: Convenient, or more hassle than it's worth?

Tapping a smartphone or watch against the terminal to access a subway line or pay for a coffee still has a living-in-the-future feel to it, even though these features are welcome in many cities and retail stores.

The process is near-seamless, takes no more than a second to complete, and in many cases means you can leave your wallet, stuffed full of bank notes and credit cards, at home.

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But are we really in that perfect future just yet? There are still numerous limitations in place preventing payment-by-smartphone from working everywhere (and for any amount), and of course there is the perennial problem of batteries running dry. If that happens mid-journey, you're likely going to end up with a fine, go without that coffee — or honestly feel you've left your wallet behind.

The idea of replacing wallets with phones and smartwatches took a major step forward earlier this year, when New York's MTA began to allow payment by Apple Pay (on iPhone and Apple Watch) and Google Pay (on most recent Android phones and Wear OS smartwatches). This meant commuters and tourists alike could tap their device to pass through the barriers wallet-free. You don't even need to open an app or unlock the device; it just works.

This step forward saw New York overtake other cities, as while Apple and Google Pay has been accepted on public transport systems elsewhere for a while now, this usually requires an extra step. In London, for example, you need to give the iPhone's power button a double-press to activate Apple Wallet, then tap on the terminal to open the barrier or make a payment.

I've used this on-and-off for the past few years, tapping my iPhone when it's more convenient than digging out my wallet and finding the card I want to use. Smartwatch payments on the city's trains and subway isn't quite as easy, as I wear watches on my left wrist and the tap-to-pay terminal is on the right of all barriers.

There are other limitations common across all cities where smartphones can be used to pay for transport. Weekly and monthly travel passes cannot be added to the app, and nor can it be told to cater for those who travel at a discounted rate, such as children or the elderly.

Additionally, payment limitations in many countries mean you cannot make large payments with Apple or Google Pay alone. In the US, you may (depending on the merchant) need to provide a signature for purchases over $50.

This is fine and of course means your wallet can still stay at home. But in other countries, you cannot use Apple Pay for purchases above a certain (and often rather low) amount. Instead, you'll need to slide your credit card into the payment terminal and use that instead, along with entering your PIN.

Countries where this limitation applies (and the amount at which it is triggered) include:

• Hong Kong - 500 HKD
• Japan - 20,000 Yen
• Singapore - 1000 SGD
• Finland - €25
• France - €20
• Ireland - €30
• United Kingdom - £30
• Saudi Arabia - 100 SAR
• Canada - $100

A similar situation apples to Google Pay too, however this limit is generally higher and you can often authenticate a purchase with a PIN or fingerprint, instead of resorting to using your credit card.

As you can see from this, there are already far too many hurdles in place to rely exclusively on your phone or smartwatch for making payments.

Apple knows this, and has designed its new Apple Card to encourage the use of an iPhone or Watch over the titanium card. This is because users earn two percent cash-back on purchases made with Apple Pay (or three percent on purchases from Apple), but just one percent when they use the card itself.

Card consolidation

If it can't entirely replace our wallets just yet, the smartphone can at least replace almost all of our credit cards — and with startup banks like Monzo, Revolute and the Apple Card, wallets bulging with cards is a growing problem. According to Fintech startup Curve, the average American wallet holds 7.5 cards, while in the UK that figure is 3.6 and growing.

Curve wants to fix this by offering a system where you can add all of your existing credit and debit cards to a digital wallet within the Curve app (for iOS and Android). You then have a single MasterCard-backed card which, through the app, can be used in place of any of your other cards.

Say you want to make the next big purchase with your Amex because you want the air miles that card offers. Open the Curve app, switch to your American Express card (Amex), then when you use the Curve card to pay, your Amex is billed.

Curve says it is working on a way to add its card to Apple Pay and Google Pay "in the near future." Once this happens, you'll be able to pick the card you want to use in the Curve app, then pay using Apple Pay or Google Pay.

This is the same as picking your card from the Wallet app already on your phone, but Curve offers some interesting and unique features, like changing which card a payment was made on, up to 14 days after you made the purchase. Curve also offers zero fees when you use any of your cards abroad.

Curve is UK-only for now, but plans to launch in the U.S. before the end of 2019.

What about identification?

This is a similarly slow-burning situation. As far back as 2016 the United Kingdom's DVLA (Driver & Vehicle Licensing Agency) previewed a way for storing driver's licenses on the iPhone's Wallet app. But this is yet to roll out to the public, and nothing has been said about the plan since 2017.

The situation is better in the U.S., but instead of being tackled at a federal level, it is down to each state to make it happen. One of the more prominent digital licenses is the $5.99 LA Wallet app of Louisiana, which launched in June 2018 and is available for iPhone and Android. The app can be shown to police officers and used as age verification when buying alcohol and tobacco, but it cannot be used at airports, or in any other state.

Pilot tests for other digital licenses previously took place in Colorado, Idaho, Maryland, Wyoming and Washington, D.C. in 2016.

Battery life

And so, we get to what must surely be the top concern among consumers replacing their wallet with a smartphone — battery life.

If you smartphone battery dies mid-journey, it is likely that you will be fined by the transport provider for being unable to exit (or show you ever had a valid ticket in the first place). A dead phone cannot make payments in the way a powerless credit card can, and until that happens — until the NFC chip can be activated without power — concern will continue to lurk in the back of our minds.

Equally so, if you rely on your smartphone for ID, like with the LA Wallet app mentioned above, the police officer who pulls you over is unlikely to be amused by the "sorry my iPhone died" excuse for not presenting your license. And while it's hugely convenient to store train and plane tickets on your phone, if your phone dies at the departure gate you could very well miss your flight.

These are not minor inconveniences, but issues which carry serious consequences. To help stop the worst from happening, you can carry a portable battery — but most of these are at least the size and weight of a wallet, so where exactly is the saving being made? You can carry a phone and a battery (and still run into the many payment limitations mentioned earlier), or carry your phone and a wallet for a balance between convenience and peace-of-mind.

At least that way, when your battery dies you'll only miss out of WhatsApp messages, not be stranded with no ID, tickets or means of payment.

Right now, paying by smartphone is a great way to get across town, and provides a useful backup for the few times you forget your wallet at home. But deliberately leaving your wallet at home is, for now, not something many of us can do the majority of the time.