Google is getting into the money business and Apple wants to store - and legitimise - our music collections. Rhodri Marsden looks at the implications of both

I was recently having one of those protracted, languid conversations in the pub with a friend when he said, wistfully: "I really like money."

I pointed out that this wasn't particularly unusual and he clarified what he meant. "No, actual money. Notes and coins. Just look at them."

He got a banknote out of his wallet and we sat there, paying it more attention than we normally would. "It's a beautiful thing," he said. "I'll be sad when cash finally disappears. I see people paying for a packet of chips using a debit card and it's incredibly depressing."

We're certainly learning to shrug off mistrust of modern payment systems; while many of us have elderly relatives who don't even feel comfortable using ATMs, younger generations have no problem with slinging money around the web on a daily basis.

But the new frontier is the mobile-phone payment. Your phone becomes your wallet; you swipe it past a terminal, your account is debited, you saunter gaily out of the store carrying your abdominal exerciser - or whatever.

Easy. And futurologists predict this will engulf us swiftly; the majority of us will have switched to these systems by 2015.

Such payment methods have been knocking around in Japan for a while, but it was last month's announcement of the Google Wallet that sparked a discussion of their pros and cons.

Google describes the new service as "tomorrow's best shopping experience"; it rolls up payments with coupons, discounts and loyalty points into a single phone app, working in tandem with a near-field communication (NFC) chip within the phone that enables the transaction swipe. Beep.

Due to be trialled this summer in a small number of locations in the United States using one specific phone (the Nexus S), it heralds an era of "frictionless" commercial transactions and there's little doubt among experts that it's more secure than plastic.

Google reassures us of its safety by naming the core of the system "The Secure Element" (rather than, say, "The Swipey Thingy").

Skimming is more difficult, as it's "impenetrable" by malware (so they say). Intercepting data is almost impossible (a criminal would need to be within 4cm of the phone to even stand a chance); it's locked down by a PIN and studies show that we tend to take more care over the whereabouts of our phones these days than we do cash or cards.

If it avoids us having to give out a 16-digit number to strangers, it protects against fraud and is easier to use. Win-win, right?

Well, there's inevitably a trade-off. One online commenter described mobile payments as "the end of anonymised shopping", one company (in this case Google, but it could just as easily be your mobile provider, Apple or whoever else gets in on the act) keeping an ever-expanding list of your purchases.

This is certainly valuable marketing data. What's more debatable is whether we gave up our privacy surrounding shopping habits a long time ago.

I remember the American film-maker Michael Moore doing a live performance 10 years ago during which he railed passionately against loyalty cards, urging the audience to get them out of their wallets and hurl them on the stage, which they did in their hundreds.

But we use them daily and the operators of these schemes - along with credit-rating agencies - hold masses of information about the way we use our money.

You could argue that Google Wallet will just formalise the arrangement in a more transparent way. And as we've seen time and time again, we're more than happy to give up privacy for the sake of convenience.

Apple is predictably cagey about whether the next iPhone will include an NFC chip, but it's likely. We can just sit back and watch the battleground take shape; Paypal is already suing Google for allegedly "stealing trade secrets" after it employed two key ex-Paypal workers.

Then we'll decide which service to go with; cue a chorus of beeps as we spend and a deafening collection of alert tones to let us know that we're in the red.

- Independent