There used to be a time, when people would carry around colourful pieces of plastic and scraps of paper with numbers on them in their wallets to be able to pay for goods at shops and even consider these convenient. Hold on, I hear you saying, aren’t these the times we’re living in right now? Technically speaking, yes. But they may very soon be over, as new smartphone-based technologies are set to take over the market completely within less than ten years. What seems to be a fantastical vision dreamed up by an untalented science fiction writer is in fact the conclusion of an in-depth report by well-respected institution Pew Internet Research – and if its predictions were to come about, it would radically change the way we shop, spend money and deal with our finances in general.
What, precisely, did the report say?
So how does the Pew Internet Research report arrive at these incredible estimations? Mainly by speaking to 1,200 technology experts and industry leaders – in short, to the kind of people who know. Their verdict is clear:
- The companies behind these revolutionary technologies are willing to cover the costs of rolling them out on a massive scale.
- Consumers are prepared for them, since smartphone use has become perfectly natural.
- Security concerns are mostly unfounded, as smartphone banking is really as secure or more secure as any of the old technologies, according to Christian Huitema, an engineer at Microsoft.
What will this mean?
Once smartphone banking facilities are installed all across the country, customers will be able to make use of them when checking out at the supermarket, when buying a meal at their favourite fastfood restaurant or when paying for their train ticket at the station.
As with any technology, whether or not consumers will adapt it depends largely on its convenience, ease of use and reliability. And let there be no doubt about it: If smartphone payment systems are only nearly as fast and intuitive as promised, they are all but certain to make a major impact, making the frequently long and cumbersome payment process a lot quicker and less nerve-wrecking. No longer will you have to wait for the person in line before you to search his wallet for a few missing pennies. No longer will you have to wait for the cash register to process a debit card payment. Instead, paying will take little more than a few seconds – things will be as close to the perfect shopping experience as you could possibly imagine.
What about cash and credit cards?
The arrival of a powerful new technology doesn’t eliminate all existing ones straight away, however. There are, in fact, plenty of unanswered questions at this stage:
- Carrying personal data, your entire contact information and wallet on a single, portable device makes for an explosive combination.
- If your credit card is stolen or lost, credit card companies carry most of the risk of someone buying goods and services in your name. If a prepaid card gets stolen, your loss is limited by the amount loaded into it. It is by no means clear whether or not this also applies for smartphone banking.
- Cash is extremely useful for smaller purchases on the move, as not all sales points – like ice cream parlours or small bakeries – can be expected to make the transition straight away.
- Smartphone banking is clearly designed for small- to medium-height purchases. Which leaves credit-, debit- and prepaid-cards indispensable for larger amounts for the time being.
With all of this in mind, it should seem clear that the road ahead for smartphone banking is still long and winding. Cash and prepaid-cards may disappear at some point in the future – but for now, these colourful pieces of plastic and scraps of paper with numbers on them are still doing a perfectly fine job.
Written by finance blogger and banking specialist Gavin Whittaker in association with Tuxedo, one of the leading providers of prepaid and travel currency cards.