Written by Shane Skelton, Aii Executive Director
For the many Americans who still begrudge the major societal shift from cash to credit and debit cards, the future may become even more troublesome as mobile wallets become more common. What’s more, is that while mobile wallets are still catching on, a new technology – hands free payment – may accelerate the transition away from (now) traditional payment methods, including credit cards. For others, like me, this marks the beginning of yet another exciting opportunity to carry less in my pockets, and spend less time moving the items that I do carry in my pockets in and out perpetually throughout the day.
Mobile Wallets are mobile applications that allow you to “hold all of the items that a physical wallet would carry on your mobile device,” including “rewards cards, medical records, credit and debit cards, and personal items.” Numerous companies provide some sort of mobile wallet. Apple, Samsung, and Android make mobile wallets available that are only supported by their own respective hardware and software systems, while Google Wallet is accessible by all smart phones (assuming the software is relatively recent). How does it work? By simply tapping your phone to a near filed communication (NFC) terminal, users can purchase items and apply rewards cards and coupons to their transaction.
Experts do not expect this to be a short-term trend. One estimate expects the global market for mobile payments to balloon from roughly $235 billion in 2014 to $720 billion in 2017. Many financial institutions participate in the mobile wallet market, including Visa, MasterCard, American Express, Capital One, Chase, and many more. Similarly, some of the countries largest retailers accept mobile wallet payments, including Toys R’ Us, Walgreens, McDonalds, Subway, Wal-Mart, Sears, and CVS, just to name a few.
As technologies improve, the mobile wallet may move away from NFC technology, making payment a near afterthought by allowing consumers to pay without ever removing the smart phone from their pocket. The “hands-free” payments (piloted by Google) combine the mobile application with bluetooth technology. After notifying the vendor the user plans to pay with Google, the vendor can confirm the customer’s identity using the picture in the user’s Hands-Free profile.
These advancements in payment technologies are exciting, and beg the exciting questions: What can we expect next and where does the market go from here? At the same time, many consumers are still getting accustomed to bells and whistles of the new tech-based, mobile application economy. This period of adaptation and transition leads other questions to arise, like: Can my data be breached? Is my privacy protected? And, what happens if my device is stolen?
The excitement surrounding the future of mobile payment is certainly warranted. Like all new technologies, there are concerns that need to be addressed too, but the opportunities presented by mobile wallets far outweigh the risks. I for one am excited to see where this path leads.