Mobile wallets, wearables, biometrics; what's next for mobile payments?
The idea of paying on a mobile device once seemed like a scene straight out of “Back to the Future,” but more Americans now own mobile devices than do not. Using a mobile device to pay from anywhere in a store or at an offsite location is no longer reserved only for the tech-savvy early adopters, it’s the new normal for both merchants and customers. While conversations about mobile payments once focused on functionality, security and cost, there’s only one question to be asked: What’s next? Here’s a look into what the future may hold for mobile payment processing.
Cards will become irrelevant.
Consumers haven’t ditched the role of physical cards as readily as some mobile industry experts originally predicted, despite the massive launch of mobile wallets by major mobile manufacturers and tech providers. Though 15 percent of consumers reportedly used mobile wallets as of 2015, CIO Magazine says that consumers’ adoptions of mobile payments facilitated by other mobile technology like near field communication (NFC) is on the rise.
The reason that NFC has generated greater adoption than mobile wallets is twofold: Unlike mobile wallets, NFC doesn’t require merchants to invest in a particular mobile wallet provider’s technology to accept mobile payment, and it reportedly results in more robust data insights that merchants can use to market to consumers who pay using NFC-based mobile payments. NFC allows for consumers to pay using their mobile device, and a direct link to their bank account or card to pay for items at the point of sale when the cashier scans a barcode generated by the device. As a result, experts predict that as NFC mobile payments and mobile wallets are more widely accepted by businesses of all sizes, consumers will steadily shift away from the need to carry a physical card.
Wearables will evolve.
Consumers may ditch their cards and wallets, but they’ll replace them with wearables. Though smart watches will continue to function as mobile payment devices, they’ll evolve into tools that facilitate contactless payments using NFC, as well as a mobile wallet. The wearables market will also expand into battery-free, water-resistant smart rings that include wireless hardware designed to process NFC payments (they were tested by users at the 2016 Summers Olympics). Simple clips that attach to a user’s waistband or belt buckle to facilitate NFC mobile payments will also become available to those who don’t want to wear jewelry. Wearable bracelet-style bands that use a person’s heart rate to authenticate ownership and validate NFC purchases are currently being piloted to facilitate secure mobile payments.
Proprietary mobile payments by retailers.
Retailers have long offered their own branded credit cards; expect them to launch proprietary mobile payment tools to retain that business when transactions become card-free. Likely inspired by the success of Starbuck’s proprietary payment app, CNET reports that Walmart recently launched its own mobile payment platform nationwide. Consumers who are at a Walmart point of sale can enter a PIN code into the retailer’s app on their mobile device when they’re ready to pay; they have the option to charge their purchase to a major credit or debit card, or a Walmart credit card or gift card. As retailers continue to seek ways to capture more revenue and consumer insights, expect the trend to continue.
Get cash using your mobile device.
Mobile payments allow consumers to charge purchases and access cash in their account using a debit card, but they’ll evolve as a means to get cash from ATMs, too. In May 2016, Bank of America launched mobile technology that allows ATM users to access their cash without a card — simply by tapping their mobile device to make withdrawals using NFC technology.
Payment with a smile.
Mobile devices and cameras go hand in hand. It was only a matter of time until “selfies” found a role in the mobile payments experience. Retail giant Amazon filed a patent in spring 2016 that would allow online shoppers to snap photos of themselves to pay, instead of using a password. To reduce the likelihood that thieves could snap pictures of people and steal their identities for a mobile shopping spree, the selfie-based payment requires the users to move in a certain direction or blink on command to confirm they are the people initiating the selfie-based payment in that moment.
Similar selfie-based mobile payment technology is being tested by major banks. In fact, the technology is expected to become so popular that CNN.com predicts consumers should expect it to be the norm in the next five years, replacing passwords and signatures. Though authentication by fingerprint has become the norm among some mobile users, biometric authentication by fingerprint or retina will continue to influence authentication in the mobile payments space.
Mobile payments allow users to manage money from anywhere, at any time. Such financial convenience is the hallmark on which the mobile payments industry was founded, and will influence how mobile payment processing evolves in years to come. Though nearly 60 percent of mobile users currently manage some aspect of their financial lives on a mobile device, most of that activity is limited to basic functions such as checking account balances. As mobile technology becomes more secure, user-friendly and value-oriented, mobile payments and their relevance to users’ lives will play a significant role in the future of finance.
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