The Past, Present, and Future of Mobile Payments

The Past, Present, and Future of Mobile Payments

The Past, Present, and Future of Mobile Payments

Perhaps the earliest form of mobile payments can be found in the barter system, when wealth in many locations was tied to forms of currency that were inherently mobile, such as cattle. The advent of credit cards in the early- to mid-20th century, however, set the stage for mobile payments that would make any other form of currency acceptance seem inefficient and cumbersome. Today, mobile payments are still making headway. The IHL Group expects mobile POS payments to grow 95 percent worldwide and 108 percent nationally in 2014.

What is Mobile Payment?

Most people divide mobile payment into two functions. First, consumers can manage bill and retail payments via mobile browsers or apps. Functions generally include transferring money online through bank accounts or Paypal, making payments for online goods, and paying bills through company or banking websites. A growing number of physical businesses, including Starbucks, even have their own apps that let users pay in the store with their phone.

The second type of mobile payment is an individual POS transaction. The transaction works the same way a credit card swipe at a store register does, but the credit card is swiped or entered using a business’s mobile device. Mobile POS payments allow entrepreneurs the convenience of accepting transactions anywhere. Products can be easily purchased using credit at craft fairs. Field service techs can accept payments on the spot for jobs. Small retailers can avoid the capital expense of register systems by using mobile devices for payment.

Slow Adoption of Mobile Payment

Despite the IHL’s predictions, adoption of mobile systems has been slow over the past few years. The Federal Reserve says that only around 12 percent of users make mobile payments, and those most likely to use mobile payment functions are in younger age groups. When asked why they wouldn’t use mobile payments, 42 percent of consumers said they were concerned about security. Other reasons given for not using mobile payments included distrust in technology, feeling that mobile payments were more work or harder than using traditional methods, and not knowing where such payments are accepted.

How Businesses Can Encourage Mobile Payment

Mobile POS and payment systems provide a number of benefits for businesses. Applications and devices such as Intuit’s Go Payment system make it easier than ever to take credit and debit payments, but businesses must take steps to earn customer trust. The National Criminal Justice Reference Service says that credit card theft is the second-most reported form of identity theft in the nation. By taking a few precautions, businesses can reduce the chance that customer credit information will be compromised through mobile POS systems. To build trust, let customers know that you:

  • Always secure mobile devices and keep access to a minimal number of employees.
  • Use malware on your computers and devices to protect against hackers.
  • Use complex passwords that change on a regular basis to secure sensitive information and applications.
  • Fully encrypt all storage and processing devices.
  • Update systems and devices regularly.
  • Don’t keep full credit card data or other unnecessary information after the transaction is complete.

Jennifer Stiles

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