You won’t be carrying a wallet for any much longer
Many analysts are now talking about the world’s next big trend, the imminent mobile payments revolution that will reinvent how we shop and spend money. News flash: it is already well under way.
Last earnings season, Starbucks announced that 16% of its revenue comes from mobile payments; that figure is ever increasing. But for the most part, heading into the future, Starbucks looks like the exception. Rather than individual shops and boutiques championing their own payment apps, the tech giants are invading this space and acquiring companies that specialise in mobile wallets in order to compete to provide a one-size-fits-all solution for the customer. Apple launched Apple Pay, Samsung bought LoopPay, PayPal picked up Paydiant, and Google acquired SoftCard. These corporations are hungry to get ahead in the race to dominate our purchases, and they are splashing out big time in order to be the most innovative and effective.
The key challenge will to be to offer a solution that is both secure and easy. Customers aren’t going to give financial details away to a company whose security systems are questionable, and they aren’t going to give them every time they want to make a payment. That means that wallets must take your credit card info once and then work automatically and seamlessly, just as when you pay for an Uber taxi or download a new book to your Amazon Kindle.
Reports last week indicated that Apple is currently in talks with the biggest Canadian banks, and hopes to expand Apple Pay outside of the US by the end of year. However, it is precisely the security versus simplicity debate that is complicating talks. Canadian banks want additional measures to prevent those using stolen credit cards from taking advantage of Apple Pay; Apple wants to safeguard its minimalistic approach that customers expect. The companies will also need to agree on terms and what percentage cut of purchases they each take.
There are also mobile money systems which bypass the need for a credit card completely. Take M-PESA for example, launched in Kenya back in 2007. It now processes over $2 bln per month and allows users to buy groceries, pay bills and purchase tickets from their mobile money account. Companies like Vodafone are at the forefront of this industry which has taken off in the developing world. Incredibly, in 16 developing countries there are now more mobile money accounts than bank accounts.
The mobile payments revolution
is now becoming a serious business; it’s most definitely not a new trend. Visa and MasterCard will only dominate for as long as mobile systems don’t. Why would anyone carry around a wallet if they don’t have to?