Currently, mobile payment solutions only replace parts of the physical wallet. And until all stores accept smart phone payments, we won't be able to ditch the leather. It's the same reason everyone still carries cash.
Part of the problem is most people still don't own smart phones, and they're not expected to for quite some time. According to Forrester Research, only 25% of US consumers will have smart phones by 2016. If the masses don't have a way to pay with mobile devices, there's not much incentive for small businesses to get on board.
Money aside, there are still physical ID cards and keys that need to be replaced. It could be a long before the government accepts digital IDs and state laws change.