Long followed barter system after years was replaced by currency based system. Why? It was the most efficient method and much preferred payment option. Later the concept of debit cards and credit cards was introduced which offered customers the ability to make purchases despite their personal shortage of cash. And now, years later a new payment solution has popped up – payments by smartphones. Smartphone payments will outpace credit cards by 2020.
Yes, you have heard that right. According to a recent survey released by the Pew Internet and American Life Project and Elon University’s School of Communications it is believed that paying with smartphones will outpace cash and credit card payments by 2020.
Smartphones will employ NFC (near field communications) technology that will allow customers to pay just by swiping their smartphone across a terminal at a counter rather than a credit or a debit card. Majority of new smartphones are equipped with the NFC technology.
What is Near Field Communications (NFC) technology?
It is an emerging technology that enables convenient short-range communication between electronic devices. It quickly swaps information between devices when they are touched together or in close proximity to each other. This helps in carrying out transactions, data exchange, and wireless connections between two devices effectively.
In function it is somewhat similar to Bluetooth, except that instead of setting up two devices together they can simply be touched to establish a connection.
Why Smartphones will have an edge over credit cards in coming years?
- Credit cards are mostly kept in wallet pockets. What if your credit cards slip out from the pockets of a wallet or the wallet itself gets stolen? Well, smartphone scores a point here since it provides a safe environment. How? While you can’t password protect your wallet, you can password protect your smartphone. No unauthorized person can use your cards unless they unlock the phone.
- In worst case a GPS enabled smartphone can be tracked down and recovered whereas a wallet cannot.
- Having all the valuable information stored on one simple device shortens the chances of losing or misplacing your debit/credit cards as they are digital and can be easily stored on your smartphones.
Owing to these reasons smartphones will soon outpace credit cards.
Other Advantages of Smartphones as credit card replacement:
- No branch, no clerk
- No payment for credit card commission
- Operations made using mobile phone
- Access to deals and offers
- Ability to exchange funds with other individuals
- Fast, anytime, anywhere
- No need for open branch, no need for PC
So do not get surprised if you see credit card companies losing to mobile payment solutions in the years to come. The only issue that mobile payment solutions need to resolve or overcome is consumer’s fear.
Many still are unaware of this newly developed concept and therefore reluctant to adopt it. Moreover, there is concern over security and privacy issues related to it.
Already existing mobile payment solutions like Google Wallet was hacked so many technology insiders and security field experts believe it is still not the best option.
Also, this is the reason why consumers do not really trust NFC payments more than credit card payments. However, over time the technology will only become better and safer allowing users to use their smartphones as credit card replacement.
Agree or disagree? What are your thoughts on this topic? Let us know them in the comments section below.
Image Courtesy: Zelda Universe
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