For almost 20 years banks have been attempting to make it easier for us to manage our money. We receive our salaries and paid our bills by transferring money digitally without actually handling any cash.
Despite the easy means of making payments, society still values cash in its physical form. Yet with new technologies such as contactless payment, digital wallets and mobile payments, consumers’ are increasingly trusting technology to facilitate the role of handling cash payments for day to day goods. The advancement of payment technology has rapidly changed and, as a result, we are changing how we interact with money.
Is a Cashless Society Possible?
Sweden is leading the way, with the aim of becoming a completely cash-free economy by 2020. In emerging markets, such as Somalia and Kenya, mobile phones have leapfrogged the traditional banking system with consumers making, on average, 34 mobile payments a month. In Belgium and France only 7% of transactions take place in cash.
In the UK in 2014 the use of cash on London Buses was banned. Additionally, over the last 5 years, there has been a 14% decrease in the use of cash in retail spending.
The convenience of contactless payment, first issued by Barclays Card in 2008 and the increase of mobile payments have helped facilitate this shift.
The Role of Mobile
As my colleague, Colin, discussed in his blog, “Google’s Mobile Friendy Update“, Google acknowledges the growing importance of mobile phones in our daily lives. Mobile enabled payments not only allow retailers and merchants to service more people more quickly, it has the added benefit of effectively linking their loyalty cards to the customer’s digital wallet.
Mobiles are always on; they are able to provide rich information on location, search habits and purchasing behaviour. The pain of paying is potentially reduced, due to mobiles, making it easier for consumers to part with their hard earned money.
With this in mind retailers should consider the robust mobile wallet strategy, which leverages the rich multi-functional information that a mobile phone incorportates, to tailor their offering to meet the customers’ needs, delivering a truly consumer centric experience while at the same time reducing their own costs.
Too Many Options
There are many different mobile payment solutions with banks, payment providers and even mobile operators offering their version of the mobile solution. Introduced by Apple, Apple Pay allows you to pay for goods using your mobile phone. LoopPay (acquired by Samsung) is accepted more widely as it uses a compatible copper loop technology that mimics the coding of our credit cards magnetic strip.
Apple and Samsung are not alone in developing innovative payments technology. There have been some recent acquisitions, as larger companies purchasing smart tech companies in an aim to drive their mobile payment capabilities.
- Visa acquired TrialPay
- PayPal acquired Paydiant
- Google acquired Softcard assets
- Lifelock acquired Lemon
Security of Online Payments
The question must be asked, how safe are mobile payments? At some stage we have all had the experience of losing our mobile phones. Accenture conducted a recent survey that revealed that although more people intend to use mobile payments, 57% were concerned with the security of the transaction.
New market entries, such as tech innovators Sthaler have developed Fingopay, that uses a strong biometric finger vein technology to ensure fast easy and secure payment. This form of payment registers your cards to your finger, essentially enabling you to authorise payment for goods with your finger. The interesting thing with biometric security is that it leaves no trace, dramatically reducing the opportunity for fraud.
In a survey of over 2,000 UK adults commissioned by Visa Europe, 76% said they would feel comfortable making a payment using biometric security. Additionally, 69% believed this form of payment would make their lives faster and easier, while 70% predicted that this will become the primary form of identification by 2020.
As technology advances, consumers seem to becoming increasingly comfortable in adopting digital payment solutions leading towards an increasingly cashless society. Although security is a potential barrier to adoption, it’s just a matter of time until a seamless secure option is established. Retailers need to ensure they have their digital strategies in place to add value in the appropriate way when consumers adopt this technology to pay for goods.