In the coming years, small business owners can expect customers to start asking to pay via their smartphones instead of a credit or debit card. A recent Pew Research Center study titled, “The Future of Money in a Mobile Age,” indicated that the mobile phone will replace the traditional wallet entirely by the year 2020.
If the idea of transitioning into mobile payments sounds daunting, take heart — experts like those at Pew agree that it’s actually not that big of a deal for most businesses.
Peter Pinch, the director of technology at Boston television station WGBH, already sees credit cards as the first step in electronic or virtual currency. An electronic transaction is already taking place with a personal or business credit card; the smartphone will be doing essentially the same thing as credit and debit cards are doing now.
The Evolution of Payment Technology
Mobile transactions and payments currently take on a number of different forms. Some methods already allow businesses to take “on the fly” credit and debit card payments from customers using a special add-on card reader that plugs into a tablet or smartphone. How easy is it to use? Some Girl Scouts adopted this method for mobile cookie sales this past year, and those who did sold more cookies as a result.
In late 2011, Google Wallet was released, but has struggled to gain acceptance from consumers and cell-phone providers. Currently, only Sprint customers can use the app. This has left the door open for other providers to get in on the game, notes Businessweek.com. Chase Quick Pay, Paypal and other credit card companies have also enabled direct person-to-person financial transfers by exchanging pertinent details like an email address or phone number.
More Secure and Convenient
Many companies are pushing for mobile payments because they believe they are more convenient for the customer. No longer will they have to keep track of all of their credit and debit cards along with paper money. Since mobile payment transactions require verification, users are less vulnerable to fraud and theft. The mobile payment option also helps customers more easily utilize loyalty programs since the information about how they spend is in one place.
The more than 1,000 experts polled in the Pew Research study were very optimistic about the ability of the small businesses to transition to the new mobile payment technology. The experts generally believe that large consumer companies, such as Microsoft and Apple, will create user-friendly software to help ease small businesses into the transition.
A Subtle but Significant Change
John Pike, the director of GlobalSecurity and one of those polled in the study, believes using mobile payments will continue to become easier and more affordable for businesses. He believes that swiping a smartphone will be a nominal difference for most since many users are already accustomed to swiping a debit card for small purchases like a cup of coffee.
The Pew study found that 65% of industry experts believe cash and credit cards will be eliminated and replaced by smartphone payments within about eight years. While old-school payment methods will still likely still be used for some transactions like tolls or tips (or wherever small amounts are required), it’s important for businesses to stay aware of the evolving changes in payment options. Before you know it, someone might try and hand you a smartphone to make a payment at your business. The good news is that the mobile wallet shouldn’t be too difficult to transition into.