The way we pay for our goods and services is changing: traditional methods such as paper and plastic are steadily being replaced by payments made at the push of a button. Online banking has been with us for years, but mobile payment options are now beginning to emerge, offering greater speed and convenience to both vendors and customers.
But do these increases in efficiency come at a price? Admittedly there are still some risks involved with mobile payments, but continued innovation is breaking down these barriers, and physical wallets could soon be extinct in many areas of the world.
The Evolution of Payment
Of course, payment methods have been evolving for hundreds of years, and mobile payments are simply the latest innovation. Paper money, cheques, and even credit cards were each regarded with suspicion and even fear by initial users, before gaining widespread adoption.
The way we use money has long been disconnected from the actual value of the token used, and mobile payments represent the latest phase of this evolution. Instead of having to exchange paper, or use a specially-constructed plastic card, shoppers will use the one device they nearly always have with them: their mobile phone.
The digital and mobile wallet is simply the next step in a process hundreds of years old that seeks to simplify the way we make purchases and sales. The need to carry around a wallet or purse stuffed to breaking point with credit cards, store cards, and physical money may soon be gone. Why carry around something needlessly, when technology can give you a simpler and more streamlined solution?
Mobile and digital wallets not only allow people to go cashless, but they also enable easy access to funds from anywhere in the world for a minimal fee. You can shop and transfer funds online or in person quickly and easily.
Losing Your Phone – an Expensive Inconvenience?
No new technology is without risks, and mobile wallets are no different. Losing your phone is already an inconvenience – but what happens when your phone is also your wallet? How will customers cope if a phone is stolen, lost, or damaged? This is just one of several risks that the mobile payment industry must overcome in order to generate universal acceptance among consumers:
Have you got your phone?
It seems obvious, but if you rely on mobile payments you simply must keep your mobile at all times. For many of us this is already a habit, but some aren’t so keen. A significant portion of individuals prefer to be less dependent on technology, and it is unlikely these individuals will embrace the mobile wallet as their only payment option.
What about security?
Security is probably the biggest concern associated with e-wallets and mobile payments. Intriguingly, this is a bigger barrier in first-world countries, because smartphones are at a greater risk of being compromised than older phones. Despite these concerns, recent advances in security such as host card emulation (HCE) and tokenization, combined with strong authentication procedures, mean that consumers and businesses are starting to put their confidence in the mobile wallet.
What happens when a merchant doesn’t accept mobile?
One of the key concerns for many users is whether merchants are going to accept payments from their e-wallets. However, some e-wallets with an affiliation with either VISA or MasterCard, are able to be accepted by any merchant that already accepts these forms of card payment. This means that it is likely that a lack of infrastructure will only be a concern in more rural areas.
What about the unbanked?
Recent reports from the World Bank indicate that the number of unbanked individuals in the world is rapidly dropping, but the figure still stands at 2 billion adults (40% of the world’s total). Many of these individuals do have access to a mobile phone, however, without an accompanying bank account they will not be able to use mobile payments. In many areas of the world the need to provide people with bank accounts before they can use an e-wallet will be one of the biggest barriers to rolling out mobile payments.
The unbanked will have the option to apply for e-wallet without any bank account, only with a easy KYC they will after few minutes have a access to their new cloud account and E-wallet.
The Inevitable Evolution of Your Wallet
Just like every other new payment method before them, digital wallets do evoke concern. But, despite these concerns, it is also clear that that the long-term benefits provided by e-wallets will fuel innovation and uptake, and that in time they will become just as accepted as the paper money, cheques, and plastic cards that proceeded them.
These benefits, which include the increase in efficiency and speed, the increase in convenience for the customers, and the reduction in the inconvenience of carrying around a wallet packed full of plastic, are enough that innovative businesses will push to become the first to overcome common objections. As a result, it is likely that within just a few years we will begin to see the demise of physical wallets within some areas of the world.back