Digital wallets will allow consumers to make cash and credit card transactions using their smartphones by swiping the phone past a sensor and then entering a PIN number to complete the payment.

Apple Inc's decision to not embed chips in its new iPhone 5 that would have allowed the phone to communicate with retail payment devices was worrisome to industry players presenting at the conference, but they said it was just one of many barriers to full acceptance of the payments technology.

Apple surprised many by not including the Near Field chips in its latest version of the iPhone. The company said it decided to not include the technology because it was not clear the technology was the proper solution for contactless payments.

Also influencing the adoption of the digital wallet is a slow take-up of payment technology by retailers, questions about which technology will become dominant in the industry, and the time it will take for banks and telecom providers to hammer out the deals necessary for consumers to be able to say goodbye to cash in their pockets.

"Mass adoption will happen when every bank in Canada and every single mobile network operator have an agreement on secure (access)," Derek Colfer, business leader of global mobile product innovation at Visa Canada, said.

"That means every large financial institution, that means every small financial institution."

Canada's financial services landscape is dominated by six large banks, but hundreds of smaller foreign and domestic lenders and credit unions also offer payment products.

The country, however, is considered an ideal test-case for the mobile wallet technology, with high smartphone penetration, a tendency to upgrade those phones frequently, and widespread use of systems such as Interac, a debit payment network owned by a group of Canadian financial institutions.

Allen Wright, vice-president of product and service management at Interac, agreed that "ubiquitous" integration will take time, and said the onus will be on providers to come up with products that will lure customers over to the new technology.

"I think that the notion that the consumer is looking for a different way to pay is a bit of a flawed logic," he said.

Canadian banks have already begun jostling for position in the nascent market.

Canadian Imperial Bank of Commerce is in an "advanced field test" of a digital wallet it is developing with telecom company Rogers Communications, and plans to launch it this year, said Todd Roberts, a senior vice-president of card products at Canada's fifth largest bank.

Bank of Nova Scotia plans to have a platform out next year, the bank's head of emerging payments, Heather MacMillan said. Royal Bank of Canada, which was not represented at the conference, has said it expects to launch a wallet next month.

The conference, called Mobile Money Canada 2012, was organized by mobile financial services consulting firm DonRiver Inc.

(Reporting By Cameron French)

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