Cash is King (and so are Mobile Payments)
What's in your wallet? Cash, credit cards, receipts, driver's license… What if all of those could be put located on your smartphone, rendering the wallet obsolete? The current trend towards cash-less and card-less payments has been doing just that. From DealBook:
The drop in the use of cash in the United States has been driven by a rise in the use of credit and debit cards. But more consumers are turning to mobile payments, using their smartphones to buy items as ordinary as a cup of coffee. Mobile payments doubled in the last year, according to Forrester Research, which predicts that the market will continue to grow 43 percent annually through 2018.
Seamless, a competing Swedish company, is using its proprietary version of QR, short for “quick response,” codes to enable mobile payments.
The company’s mobile payment system, known as SEQR, was introduced in Sweden in 2012 and is used by more than 4,600 merchants there, including McDonald’s and Burger King.
The transactions are not executed through a credit or debit card network, so the cost is lower for retailers. Often the savings is passed back to consumers through digital coupons for discounted purchases or by depositing cash back into the account of a user who makes a certain amount of purchases, said Peter Fredell, the chief executive of Seamless.
On average this year, we’ve given back about 100 kronor a week to people,” Mr. Fredell said. That translates to about $800 a year, he said.
The company recently announced plans to bring its technology to the United States and Britain.
There is no doubt that mobile-payments are more much more convenient that cash or card payments (no more need for the cashier to find change for you nor enter a pin number). The millennial generation is especially receptive to new technology, and their adoption of the mobile-payment application Venmo has been widespread. Here on campus, "Can you Venmo me?" is used widely when splitting dinner bills or paying back owed money.
With the added convenience of cash-less and card-less payments, I believe that the use of mobile-payment applications such as Venmo, PayPal and Google Wallet will become much more widespread. Paper and coin money dates back to the Medieval times, and the magnetic strip technology used on credit cards was developed during WWII. What do you think is the future of mobile applications and their ability replace cash and card payments? What are some of the challenges that wide-spread adoption of mobile payments faces?
Thoughts monkeys?
I think we might have a beta max vs VHS situation between cc companies wanting the smart chip cards to keep their business alive and mobile payment apps that bypass credit cards completely. Should be interesting.
mhm, I've actually been doing a lot of research on the mobile payments industry for a business idea of mine and I can tell you that mobile payments can be very beneficial to merchants. Companies such as Dwolla allow merchants to accepts payments with incredibly low transaction fees (25 cents for purchases over 10 dollars and free for anything under). I also think that widespread adoption of Venmo will help facilitate the movement to mobile payments, especially with their creation of the Venmo payout api(beta). It has a similar payout structure as dwolla and could be modified through an application to facilitate mobile payments. The only problem I see is that Venmo's parent company is Braintree, who is in fact owned by none other than paypal. Unfortunately paypal and braintree still generate revenue through a more traditional transaction structure with a fixed amount + small % of the transaction. This conflict could hinder the spread of mobile payments.
Another company that is seeing great growth in the mobile payment space is LevelUp. LevelUp incentivized customers by creating a rewards program for the customers that also helps market merchant products.
The first thing that comes to mind (for me) with mobile payments is the issue of mobile security. How good is smartphone encryption technology at the moment? I feel like internet security companies will see large increases in revenue from their smartphone security apps as mobile payments increase in popularity. Just a thought...
I personally really enjoy carrying around a wallet. I wouldn't feel safe having all my info on a smartphone with security systems that a clever hacker could bypass.
There is a big part of me that agrees with you. I wonder how much of that is just paranoia on my part and how much is legitimate concern. I will say that if I lost my wallet I wouldn't be as worried as if I lost my phone. I can cancel credit cards, bank accounts, etc. pretty easily, but if someone were to hack my phone they could get into my email, dropbox, evernote, etc. and have EVERYTHING they need to ruin me.
A little scary.
I'm am looking forward to the time when I can pay with my phone. I never have cash on me anymore, and simply use Venmo to have other pay me back. It is going to be incredibly difficult to get credit cards to switch towards mobile transactions. This old system where they charge fees at every single step is incredibly lucrative for them and has some significant momentum behind it. They are not going to want to let that go easily. I really like Dwolla and hope to see it succeed, but it won't be easy. It's kind of a chicken and the egg scenario: merchants don't want to adopt it yet since there aren't many users, users don't really want to use it yet since it is not accepted at many places. Hopefully one of these companies will come up with the right formula to sufficiently encourage merchants to embrace these new payment systems and in turn attract the customers.
Hi there, I'm currently working on an project to bring the dwolla wallet to the mobile payment world and I was wondering if I could ask you some questions. At the moment, in order to use Dwolla, you must attach your bank account number and router number to your account. How do you feel about that? Is that something that may deter you from using mobile payments? would attaching a debit card work better for you? What incentives would make you want to switch to paying with a phone? your opinion is very important to me and I'd love to hear back!
Unless mobile payments give me 5% cashback, miles, or points, I don't think I will leave my credit cards. Plus, I like carrying a wallet anyways.
Given that mobile payments give you similar rewards to credit cards, what makes you want you stick with credit cards? Just trying to get some insight into your thought process.
Care to share what mobile payment gives you 5% cashback on purchases?
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