The act of paying is becoming cashless and invisible. The reason: the digitization of all processes in which the banal act of exchanging money for goods is involved and the emergence of streamlined payments, mobile payments, and cryptocurrencies. The rise of connected devices opens broad horizons making fin-tech a key player in the field of Internet of Things.
Imagine, future cars could perform payments to the charging station on your behalf. Are we ready to say goodbye to the deep-rooted gesture of counting cash and coins while queueing at the supermarket?
The spread of NFC-Terminals
The constant innovation is changing costumers’ payment habits and preferences. Consumers have passed from a holistic relationship with cash to use invoice, PayPal, direct debit and debit/credit cards when ordering online. Parallely, Visa (with their system Paywave) and Mastercard (Paypass) started promoting contactless payment methods pushing retailers, restaurants, gas stations and supermarkets to acquire this new technology. As a result, the prognosis is that by 2017 56% of retailers will have their terminals with NFC technology.
For example, Aldi has implemented NFC-Terminals in all checkouts so that consumers can pay faster and easier by NFC cards or smartphones. Other big supermarkets like Kaufland or fast-food restaurants are gradually implementing that. The action of payment is, as you can see, mutating.
Actually, NFC terminals have many advantages for both shoppers and retailers. Customers can purchase in a faster, easier and more convenient way. Consequently, retailers can get higher revenues, gain reputational benefits and save significantly costs; because cash costs. According to a study by the Berlin Steinbeis University, the cost of a cash system for the trade sector is up to 7 billion euros a year. They require expensive safety equipment and external service providers for the cash transport. Last but not least, imagine the time spend counting money every day all over the world.
However, all that glitters is not gold. Shoppers are very reluctant to use contactless payment methods because they don’t perceive them as secure. They don’t know how safe their data are in case of fraud or robbery. For instance: NFC terminals accept payments up to 25€ without PIN. Some are worried that the radiofrequency chips inserted on the smartphones or cards can be easily accessible by someone else in the tram or underground and, consequently, grab their card details.
But the Fin-Tech industry is working on biometric authentication via fingerprints or eye-recognition to save this barrier and make the new generation of P2P payment methods even more attractive.
Towards invisibility and machine-to-machine payments
So where are we heading? There are several initiatives working on integrating payments in smartphones, smartwatches or other wearables, laying the foundation for automated machine-to-machine payments between smart devices.
Google Hands Free is the company’s latest payment innovation, enabling payment through Android Pay without having to take your phone out of your pocket. Moreover, some tech firms are looking to integrate payment features inside messaging apps. This idea is very common in Asia, where apps like WeChat let users buy food, order taxis, pay bills, or check bank statements, among other things. Of course, Apple is also in this race with Apple Pay and Apple Watch.
There is not yet a clear dominant payment option. It seems we will pay in different ways depending on the circumstances in the future. In many cases payments will become “invisible” and integrated into services. Then to counterpart this effect, financial and high tech companies should assist users to keep track their expenses through tools in order to gain their trust as well as to develop not only biometrics authentication but also other secure alternatives for machine-to-machine payments.
While reading these lines, have you already imagined that day without cash money? If so, maybe similar pictures spring to your mind: Will we stop flipping a coin? Imagine Floyd Mayweather, rap music videos or The Godfather movies without cash – can you?
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