The Future of Mobile Payments
Mobile payments offer the promise of great convenience, but the technology behind these systems is still in its infancy. Nonetheless, the world of finance seems to be moving in the direction of a cashless society. While physical money might never be phased out entirely, the ease of use and low cost of electronic transactions can eventually transform mobile payments into the option of choice for most consumers.
Smart Phones and Smart Wallets
Apple and Samsung, the two largest smartphone manufacturers, are poised to dominate the future of mobile payments because they already have functioning services. Apple Pay and Samsung Pay, along with competitors such as Google Wallet, provide essentially the same service.
When you use your mobile phone equipped with a service for paying bills, you simply wave your device over a terminal at the point of payment and — like magic — payment is transmitted directly to the merchant.
All of these services use near-field communication, or NFC, to send a transmission to an NFC-enabled reader offered by the merchant. As more consumers become comfortable with this type of technology, its use will likely spread.
App and Online Payments
You can also utilize mobile payment technology to move funds electronically. For example, Xoom, a money transfer company that was recently acquired by PayPal, provides an app and a website that allow you to send money anywhere in the world.
Whereas global money transfers used to require a trip to the bank or to a Western Union office, mobile payment technology now allows you to send money nearly instantly. By pressing a few buttons on your phone, you can transfer money and get written confirmation of the status and receipt of the transaction. Social media has also gotten in on the act, and you now can send money directly via Facebook or other messenger and chat apps.
Wearable and integrated technologies are expected to play a major role in the future of mobile payments. Devices such as the Apple Watch are at the forefront of the wearable technology movement, in which everyday devices can now track, record and transmit data.
Much like electronic toll collectors allow you to make automated payments on bridges and highways, wearable technology can be used to make NFC payments. Other versions might use Bluetooth technology and proximity sensors to accomplish the same types of payments. While it may sound like science fiction, even biometric technology — such as fingerprints and retinal scans — may be used to transfer money in the very near future.
Risks and Rewards
The future of mobile payment technology offers the promise of convenient, cash-free transactions that reduce costs for both consumers and merchants. The move toward a cashless society might also provide additional benefits, such as the reduced risk of theft due to lower amounts of cash held in pockets and merchant tills, as well as the hundreds of millions of dollars the government would save by reducing or eliminating the production of coins and paper bills.
The main drawback to the rise of mobile payments is the risk of hacking or other forms of electronic theft. Mobile payment systems will not become ubiquitous until consumers and merchants alike trust that they are secure.