The Future of Payments: A Revolution

Wednesday, September 6, 2017

The Future of Payments

Americans aren’t using cash that often anymore. In fact, in the United States, the average person makes a non-cash purchase 376 times per year on average. So, what’s replacing cash? Well, despite the fact that credit and debit cards are used now more than ever, they are not the only options, and we have far more modern ones already emerging.

FinTech companies are consistently working to bring us new technologies, and there are plenty of people with confidence in them. In fact, in 2015, funding for such businesses reached a global figure of $19billion, which has been growing year on year. Investments mean more modern alternatives, and it’s already starting to show.

What’s Already Out There?

Paying through a phone is a viable modern alternative to carrying cards or cash. 77% of American consumers use a smartphone, so it makes sense that these are being brought into the equation when it comes to their fiscal matters.

By now, you will probably be familiar with apps such as Apple Pay and Android pay, which allow users to link up their existing cards with their technology to make secure payments through contactless transactions at a variety of locations worldwide. In fact, anywhere that you see the “contactless” symbol is usually set up to respond to it. These technologies pride themselves on being safe, as you can see a list of the transactions you’ve made. However, you do need to be extra careful if you have a habit of losing your phone – you don’t want to put yourself at financial risk, but because you don’t need to sign or enter a PIN, you need to be aware that if it got into the wrong hands, others could use it.

Of course, many companies accept your payments digitally, without you needing to enter your details each and every time. Uber absolutely revolutionized the taxi industry, providing ride-sharing options to customers in a multitude of locations. Riders don’t need to pay cash – their details are stored, and then money is debited accordingly from their account after each ride. This is called the M-commerce model, and more and more companies are adopting it. The technology Uber uses isn’t the only way your phone can help you when you’re without cash, as you can actually even pay by using your phone bill. Pizza Hut allows customers in certain regions to simply add the cost of their food to their monthly direct debit, and there is a multitude of online bingo sites which will allow you to do the same.

How Can Apps Help?

There are many existing apps on the market for people who don’t want the hassle of carrying their cards or withdrawing cash. As many people simply don’t carry cash these days, there are plenty of financial apps which allow for quick movements of currency between friends and companies. PayPal is an obvious example, allowing you to send money to people, with “family and friends” options and commercial options, too. All you need is an email address, and it’s very simple.

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The trick to new apps is that they need to have a “unique selling point”. PayPal’s is obvious – it protects you and has systems in place to raise complaints against those who do not deliver agreed goods or services. Their resolution centre is highly equipped to effectively deal with such problems.

The future of payments through apps will rely on the consumer’s concerns about fraud. Our whole lives are on our phones, so it makes sense to use them for payments, but there will need to be similar advances in adopting more personalised authentication methods. Companies are developing biometric technologies using fingerprints on screens, and taking into account things like geopositioning – but there’s scope for so much more.

The second things companies will need to take into account is whether their apps work in real-time. There’s no use paying for something if it’s not instant.

What’s To Come?

Digital currencies may well be a big thing, and we are already seeing the emergence of these, thanks to cryptocurrencies like Bitcoin which are modernizing the game. Independent of a central authority, digital currencies rely on ledgers to reduce intermediaries and improve the abilities for transfers to be properly traced. Many organizations are looking into using the revolution such technologies are tapping into for their own gain, which could have implications on things like foreign exchange and how financial institutions interact with one another.

However, until such methods become more widespread and easier to use (for example, for converting the dollars they’re earning into this currency), then digital currencies won’t lead – yet.

One thing’s for sure, paying with cash is a dying art, with only 14% of Americans saying they use it for purchases every day. So, there’s a whole realm of possibilities of what will replace it. Now that we’re combining one of the oldest industries (finance) with the most promising (tech), it really is fascinating.

By  33rd SquareEmbed


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