Mobile Wallets Leave Traditional Wallets in the Past
January 20, 2017 Categories: Emerging Technologies, Industry News Tags: banks, electronic payments, epayments, mobile payments, mobile wallet, NFC
In a story published in May 2014, the Washington Post reported that eight in ten people carried less than $50 in their wallets. In the months since then, there’s a good chance that statistic has increased to nine in ten. Most people carry wallets to keep their credit cards, driver’s license and children’s pictures, but very few actually put money inside them anymore.
Smart bank cards, cell phone-based credit card processing and other technologies have almost replaced cash completely, and there are significant benefits for consumers and financial institutions.
Convenience for Consumers
Anyone who has ever tried to find the correct change for a vending machine that only accepts exact change, or realized at the supermarket’s checkout counter that they forgot to visit an ATM knows just how great alternative payment methods are. There are many reasons why electronic payments and mobile payments are more convenient for consumers:
- Consumers have their phones with them all of the time. Mobile payments ensure they’re never caught without money to pay for goods and services.
- Mobile payments are infinitely safer than carrying cash. Phones are secured by passcodes, as are debit and credit cards, which makes them a more convenient option.
- Spending is easier to track when not using cash. Anyone who has ever drawn cash only to find it gone, with no recollection of what they spent it on, can vouch for that!
With mobile payments due to grow at a rate of nearly 37% every year, it’s clear that the convenience of mobile payments is not lost on consumers, and they’re making the switch in droves.
Small Businesses Getting Online
There was a time when small businesses, particularly informal businesses like those who sell goods at farmer’s markets or provide small scale services in a neighborhood, could only accept cash or checks. Recent advances in mobile payments options from Square, TD, Intuit and other companies, have made it possible for business owners to affordably accept debit and credit card payments on mobile devices. Although that is a big leap forward, there are no affordable and easily accessible options for small businesses looking to use NFC (Near Field Communications) to accept mobile wallet payments that utilize this technology. Apple Pay may be the catalyst that changes all of that. With only 23% of all purchases predicted to be made in cash in 2017, it’s only a matter of time before small businesses catch up.
Benefits for Banks
The banking process has been very uniform for generations. If a consumer wanted to make large transactions, they entered a branch. Small transactions were paid by check, cash, or credit. ATM’s made the process a bit easier for everyone, but there haven’t been many significant disruptors in the banking industry for a long time.
Mobile payments are set to change the way banks operate. Banks who are at the forefront stand to benefit hugely. With mobile wallets going mainstream, banks will be able to have smaller, leaner physical branches, and potentially fewer ATM’s. In the future, everyone will have their bank in their pocket. This development will enable the banking industry to have better data about customer spending patterns and offer more in-demand products. The fact is, for consumers, small business and big, the rise of the mobile wallet is a great thing. Long live mobile payments.
Click here to learn more how FSSI can help support your mobile payment strategies.