You are spot on! At one point, credit cards were non existent & people got travellers cheques. Today our Canadian dollar bills are half plastic and the banks are informing clients that the Federal Government will be eliminating cheques by 2016. Times change. Expectations change. Cell phones now don't have buttons. Virtual payments will become the norm.
It'll just be a matter of how easy you can make it for people to put money in & use it. And of course feel safe that nobody will be taking it from them. Online banking is likely way less secure than they make it out to be yet people still believe in banks since they've been around 100 years. Silly but that's the way it is.
Why not do a messaging-like app for payments? (This is really just a mobile wallet, but makes it less intimidating for the average user by converting the payment address into a universal payment address, or UPA)
This is more or less how MPesa (in Kenya) works.
So instead of sending money to rjgvijrwgiwg9uf9frwerfwd for example, the user would send money to +16469218113
For this, we recruit agents that will sell scratch-off cards*. The user buys the card from the agent (the agent gets a small fee; this could also be an online operation) and puts it into the app to fill their account. The receiver simply installs the app to see their incoming payments, much like how Whatsapp shows you all your friends that have it installed.
I'll post this idea to the subreddit in case anyone is interested in talking about it.
*Alternatively, QR codes could be printed out from a computer. The user just buys the piece of paper, scans the code, and confirms the transaction with the agent.