Future of Money

Things have changed. Things have changed a lot. Never mind the first civilizations that took place centuries ago, but just consider 1950’s. (I think it is funny for a person born in 1986 to say that :), but let’s admit it, things have changed dramatically in most aspects of life since then.) So did the money, and the way we purchase.

In first civilizations, people used barter. They exchanged livestock or crops that had personal values for them. Then they started using shells for medium of exchange. Later metal coins came into stage. Then the banknotes and then the credit cards appeared.

We are not seeing that much of banknotes going around us in daily life any more. Most of the payments are made by credit cards or transferred digitally via banks. To speak for myself, I only use cash when I use taxi or buy a bottle of water from a store.

The future of money has been a hot topic. Although money’s form has changed a lot, it is expected to be changed more. (I think it is gonna vanish 🙂 ). With the rise of smart phones, tech and finance companies try to use the smart phones as a digital wallet which people can use for their purchases.

These smart mobile phones have been already doing a lot in terms of financial issues. For example, more than one third of smart phone users  in United States have used mobile banking services and 90% of them check account balances and recent transactions, 42% of them transfer funds and 12% of them have made payments such as paying bills online. Also according to a research from comScore 38% of smart phone owners have used their cell phone to make a purchase of some kind, with digital goods (such as music, e-books or movies), clothing and accessories, tickets and daily deals leading the way as the most popular mobile retail categories.1

Although digital wallets or mobile payments are not widespread yet, companies have already proposed some solutions. Google launched Google Wallet in partnership with CitiBank and Mastercard based on near field communication technology (NFC).  Another NFC based payment system called ISIS will be piloting in partnership between Verizon, AT&T, T-Mobile, Visa, American Express, Discover and MasterCard.1 This system works by tapping or taking  the smart phone closer to the point of purchase hardware in collaborated retails. Paypal and square applications offer mobile payment alternatives for retailers by embedding an extra hardware (plug-in) where customers can swipe their credit card and complete the payment. You can watch the videos below to understand how it actually works.

Google Wallet

 

Paypal

 

Square

 

I think all parties that are involved in mobile payment sector waits for Apple’s move, since they didn’t launch a dramatic application or hardware related to this topic. Since Apple has already credit card information of millions of users because of iTunes, a clever move of theirs can change the rules how this game is played.

Very recently Apple launched an application called Passbook, which collects all your store cards, gift cards and coupons(generated in related iOS apps) in one place, enables localized notifications for already bought tickets or owned loyalty cards and makes Apple approved way purchases available. It is not a digital wallet alternative right now but who knows if it is going to return into one soon? For more information on Passbook you can click here.

In my own opinion these mobile digital wallets have many advantages over the traditional one :). It does collect all your financial information in one place which saves you from carrying multiple cards and cash. It can use your location info for more convenient experience and track and save your purchasing behavior in order to use for customized promotions.

I am eagerly waiting for widespread adoption of mobile payment services. It will be much more comfortable and easy for costumers.

References:

1http://pewinternet.org/~/media//Files/Reports/2012/PIP_Future_of_Money.pdf

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