What do you carry in your wallet? Cash, credit and debit cards, driver’s licence, and perhaps a photograph of your loved ones. With the exception of cash – which the Reserve Bank says represents only around 10 percent of all transactions today – all of those other things can be carried on a modern smartphone, and probably soon will.
A decade and a half after consumers started doing simple transfers and payments on early mobile phones, new smartphone technology is combining with innovation from banks, card companies and payment providers to deliver a true e-wallet, packed full of applications for any number of payment situations.
Transfer between accounts, pay bills, send money to friends, pay for lunch or trade stocks. Consumers can do it all on the same device, in between updating their Facebook status and posting a selfie to Instagram.
In 2014, Australia did away with signatures on credit cards and universally moved to PIN numbers.
Secure encryption and near-field-communication (NFC) technology – like that used in MasterCard PayPass or Visa payWave – is a generation on from the chip card.
It has put a new expression into the language – “tap and go” – and Australia already has one of the highest ratios of contactless terminals in the world.
According to Juniper Research, three billion contactless smartphone payments were made worldwide this year, but the number is tipped to explode to ten billion by 2018. By then, Juniper estimates that one in five smartphones will act as digital wallets.
According to Westpac, just over 60 percent of credit and debit card transactions in Australia are already contactless, and we have four times more tap and go terminals than the UK, and ten times more than the US.
But it’s not just consumers who are being impacted by the mobile revolution, Australian merchants cannot avoid considering the possibilities.
Financial research firm East & Partners does an annual merchant payments report, and asks more than 2000 businesses of all sizes about their technology priorities.
In the most recent report, nine out of ten merchants said contactless payments were a key technology priority for the next two years, and six out of ten nominated mobile phone payments.
Many of these merchants are not simply implementing wireless NFC terminals for their business to deal with customers, paying with smartphones or contactless cards, but they are increasingly turning to business-ready apps to manage their businesses finance on tablet devices.
Financial modeling, planning and back-end management systems which were once the province of large IT vendors with large enterprise resource planning systems are now easily available for tablet devices, both iPad and Android.
Even sophisticated point of sale systems, one of the most critical business applications, are available for tablet devices, effectively turning a tablet computer into a cash register.
Not only do these systems work at point of sale, but they trap the information and report it to the back end systems, where it can be kept and analysed.
Add the capabilities of cloud computing and software-as-a-service, and small businesses today are equipped with financial tools not too far short of the top corporations.
Australia’s payments systems are in rapid transition, both for consumers and merchants, but the theme of digital mobility is a key trend for the future.
Mobility will transform the way we pay for goods and services and manage personal finances.
It will also empower smaller businesses as never before, arming businesses with financial.
This article represents the views and opions of the author and do not necessarily reflect the opinions of BPAY.
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