mobile paymentsRead the tech and personal finance news these days, and you could be forgiven for thinking that folding cash will soon be extinct and credit cards a thing of the past. All the hype suggests that the digital wallet will change everything -- yes, everything -- about the way we spend, save and manage our money.

At DailyFinance, we've been guilty of some of that hype, with our stories about Square, Dipjar, etc. But a growing chorus of naysayers is questioning whether the digital wallet revolution is really all it's cracked up to be. While a few consumers may be whipping out their smartphones for remote transactions, cash and plastic still rule when you're standing at the register.

"Mobile payments and purchasing at the physical point of sale have experienced little adoption in the U.S. marketplace despite abounding innovation in mobile and payments technologies," according to a new report on the mobile-payments industry from Javelin Strategy & Research, a consulting firm in Pleasanton, Calif.

In fact, only 9% of U.S. mobile phone owners have made a purchase with a contactless point-of-sale payment in the last year, and of the $20.7 billion in mobile retail payments this year, only $400 million (a hair under 2%) came from POS mobile payment.

Without that crucial point-of-sale adoption, mobile payment technology will never become the norm.

Here are four reasons why you should hang onto your old-fashioned wallet.

1. America Is Too Developed

Though mobile payments have caught on widely in countries like Kenya, where the banking and ATM infrastructure is sorely lacking, there's no significant problem waiting to be solved by contactless mobile payment in the U.S. The large majority of us have checking accounts and credit cards at the ready, and fairly easy ways to get our hands on our cash even if we don't.

Still, the 15% of U.S. adults who are underbanked are among the most likely to follow the lead of developing-world customers and make POS mobile purchases, according to the Javelin report: Some 12% of underbanked mobile phone owners have done so.

Mature economies have a history of being slow to embrace mobile wallets. The technology has been in use in Japan since 2004, as The Atlantic points out, but by the end of 2010, only 10% of Japanese customers were making purchases with their smartphones.

"In rich countries, at least, the existing means of paying for things are already pretty great," Christopher Mims wrote in The Atlantic. "And none of the competing mobile-wallet technologies has too much of an edge either over the old methods, or over each other."

2. There's No True Incentive

Michael Weinberg, the CEO of Sunrise Equity Partners in Boca Raton, Fla., thinks that to succeed, mobile payment technologies will have to find a way to be of more value to their users.
"A successful mobile payment solution, will then need to add value in order to drive consumer adoption," he said. "Digital couponing is also extremely important. Imagine grocery shopping and automatically receiving any available coupons without clipping them or scanning each item as you put it into your cart, receiving an offer for a free trial from a competitor and then being able to pay going through a simplified self-checkout."

3. Our Phones Aren't Ready

Just as consumers have yet to fully embrace m-commerce, smartphone manufacturers have yet to integrate the near-field communications technology such applications require into most of their handsets. Only some 2% to 3% of smartphones in the U.S. have NFC capabilities, according to The Wall Street Journal.

Sure, there are other methods to make a smartphone transaction: Shoppers can use QR codes -- those ink-blotty, pixelated squares -- displayed on their phone screens; or the "pay by name" platform that Square employs, which identifies the buyer through his phone. But there's no significant advantage or reduction of "friction" in these methods.

To boot, Apple (AAPL) chose to forgo NFC technology on the iPhone 5 in favor of PassBook, its own mobile purchasing platform. Considering Apple's trend-setting and market-moving role in the smartphone business, that's a major blow to wider NFC adoption.

In London, Gregory Lee, managing partner of Dineromobi, which works on mobile money initiatives in West African, Indian and Middle Eastern markets, believes the slow adoption of NFC to be a major problem for mobile wallets.

"Look at iPhone 5 -- no NFC," Lee said. "I am fond of saying that NFC really stands for Never F-ing coming! I started in the mobile payments sector on NFC projects in 2005, and we're still waiting for the phones ... I do not read runes, but with no NFC, the contactless POS infrastructure will be for contactless cards on low value transactions. Go to any sandwich shop in Manhattan. But where else?"

4. The Retailers Aren't Ready

POS mobile payment is a two-way street, and just as consumers lack the technology on their phones to pay, merchants lack the infrastructure to take mobile payments in their stores. As Lee implies, large retailers will need to adopt POS mobile technology in droves if it's to gain any momentum.

Walmart is testing a new checkout system dubbed "Scan and Go" whereby shoppers can scan items with their phones as they shop, then skip the checkout lines in favor of quick self-checkout stations -- think of it like an E-ZPass for your shopping cart. But that appears unlikely to appeal to older consumers, the majority of whom just don't see the point. Among survey respondents who hadn't tried contactless POS payment, 61% of those 65 or older said they didn't see any benefit to the technology, whereas just 40% of 18- to 24-year-olds said the same, according to Javelin.

In fact, Mike Cook, the assistant treasurer for Walmart, has been vocally skeptical about NFC lately and has chosen not to accept Google Wallet because of the slow adoption of NFC. Walmart, along with the big retail consortium Merchant Consumer Exchange is developing an alternative technology it hopes will dominate the marketplace.

It may well be that it's just going to take more time: time for Gen X and Y consumers who are comfortable with the idea of digital wallets to adopt them; time for retailers to start reward their use; time for retailers and phone manufacturers to build and install the necessary tools to facilitate the frictionless shopping experience.

Regardless, though, the real challenge for mobile wallets may ultimately be that the current system isn't half bad.

"If it requires several steps to get to a full-featured platform, there will continue to be slow adoption," Weinberg said. "Once people get over the cool factor, they will realize that it is still easier to pull out a credit card and swipe. If we still need to carry our physical wallets, most of us will probably revert back to swiping."



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