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My Phone Is My Wallet

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Photographer: Anthony Kwan/Bloomberg
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The future of money is in your pocket — the one you keep your phone in, not your wallet. A growing portion of the world’s population is making phone-assisted transactions. They’re using a variety of technologies, from the text-message system popular in Kenya to the seamless credit card-and-app arrangements that move money for every Lyft and Uber ride. It’s a revolution that’s lagged in the U.S., despite offerings from Apple Inc. and a range of big retailers. In addition to providing convenience and sometimes lower fees than credit cards, these mobile-payment systems are connecting millions of previously unbanked people: In China, some beggars hold out bar codes instead of tin cups. In places such as Sweden where the apps are especially popular, cash is starting to disappear. And beyond the cash register, it’s clear that a good chunk of the traditional consumer-banking business stands to be upended.

The Chinese have adopted mobile payments perhaps faster than anyone else. The shift has been driven by services owned by two of China’s internet giants: WeChat Pay, offered by Tencent Holding Ltd.’s messaging service, and Alipay, part of Zhejiang Ant Small & Micro Financial Group, which is an affiliate of online retailer Alibaba Group Holding Ltd. Alipay, which claims 850 million users globally, handled 256,000 transactions per second on its busiest day in 2017 — more than 10 times the capacity of Visa Inc.’s network. Both services rely on those square variations of traditional bar codes known as QR codes. Apple’s mobile-payment system, Apple Pay, uses a technology called near-field communication that allows buyers to wave a smartphone near a credit card terminal. With the U.S. market slow to develop, Apple Pay has gone live in 24 markets worldwide. Most major U.S. retailers and banks have launched their own mobile wallets, hoping to replicate the success of apps of early movers Starbucks Corp. and Uber Technologies Inc. PayPal Holdings Inc. has seen strong growth in its peer-to-peer app, Venmo, which lets consumers split rent payments or dinner bills. Europeans as a whole have been even slower to adopt mobile payments. But in Sweden, which has a population of 10 million, Swish, a service backed by local banks, already has 6.5 million users.