Mobile Payments: From Evolution to Revolution

The ability to make payments and conduct transactions using a wide array of electronic devices – including smartphones, tablets, wristwatches and other wearables – means faster, more convenient and safer payments with added value. Mobile payments create new possibilities such as real-time promotions, rewards and loyalty programmes; innovative business solutions; and real-time digital transaction records. With these options, consumers have come to expect greater functionality from their everyday payment instruments.

The launch of Apple Pay last autumn brought mobile payments to an unparalleled level, leveraging existing infrastructures to create a new world of possibilities. As near field communication (NFC) and Europay, MasterCard and Visa (EMV) capabilities become more widely established, Apple Pay demonstrates that mobile payments are not just changing how consumers make a purchase, but are delivering a better end-to-end purchase experience for the consumer.

This impetus means there is no turning back and mobile payments will continue to grow.

The Future of Payments

According to the most recent edition of Ericsson’s
Mobility Report
, 90% of the world’s population above the age of six will have a mobile phone by 2020, with India and China showing the fastest growth. Asia is the leader in the world for smartphone usage and engagement, and Singapore’s digital economy leads the pack, according to the Digital Evolution Index (DEI) developed by The Fletcher School at Tufts University and MasterCard. Singapore is now the number one smartphone adopter in the world at 85%, outdoing South Korea at 80%, Google’s
Consumer Barometer
found.

Technology and innovation are creating game-changing possibilities for payments-related safety and security that were once unimaginable – ushering in a new era for protecting and verifying transactions without encumbering the consumer’s shopping process. Digital verification technologies, such as facial recognition, biometrics and tokenization, create new opportunities for a simplified and secure payment experience.

Contactless payment, made possible by NFC, has been around since long before Apple Pay came on to the scene. Take MasterPass for example, a digital service that allows consumers to use any payment card or enabled device to discover enhanced shopping experiences that are as simple as a click, tap or touch – online, in-store or anywhere. Bringing together all of the ways we pay for things, from traditional plastic cards to digital wallets, the service gives consumers the ability to make a payment from wherever they are, with one simple experience. It works across a broad range of devices, including smartphone, PC, tablet and connected appliances.

The Promise of Mobile

Mobile technology is opening up endless possibilities for faster, easier, and more rewarding transactions. Among them: paying your restaurant tab without getting up from your table; ordering and paying for a taxicab; having popcorn brought to your seat at the movie theatre, or a hot dog to your stadium seat; ordering and paying for your child’s school lunch; or sending money to a friend through a ‘peer-to-peer’ (P2P) mobile app.

Mobile apps will continue to develop new functions that will eventually render the physical wallet obsolete. Cities such as London are already experimenting with mobile wallet solutions for public transport. However, the innovations go beyond payment solutions. The US state of Iowa is testing a driver’s licence smartphone app to replace the standard plastic card; one that would connect with real-time traffic information and alerts such as licence expiration dates. Singapore, meanwhile, facilitates the creation by developers of a wide range of apps that use government data, while Japan encourages app developers to come up with new ways to make the complex Tokyo subway system easier.

Moreover, mobile technology doesn’t just stop at phones or tablets. As technology evolves, so too will its delivery method. Together with identity wearables company Bionym, MasterCard last year announced a multi-bank pilot programme to test the use of wearable devices to authenticate ‘contactless’ mobile payments.

Participating card-issuing banks will insert NFC technology into Bionym’s wristbands, whereby the band wearer’s unique heartbeat can verify that he or she really is the actual cardholder. If successful, this trial could become a future alternative to fingerprint reading technologies.

Regardless of the device used, mobile technology will be the key in extending financial services to millions of people around the world who still lack access to the most basic financial tools. A mobile phone means access for the un-banked and under-banked to financial products such as payments, lending, and long-term savings/investments and insurance.

This is just the start of the transformation we’re seeing in the way we conduct our daily transactions – promising less of an evolution, but more like a revolution.

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