Recognized payment methods such as credit cards and debit cards are soon to step down as the dominate payment methods with the growing adoption of mobile based payments.
It’s no surprise mobile payments are gaining momentum. With more payment mobile payment options and alternative payment methods being made available on smart-devices more consumers are seeing the convenience of mobile payments.
According to research firm Gartner, mobile based payments will account for an impressive $720 billion by 2017, up from $235 billion in 2013. When comparing those numbers to the amount of funds transacted by credit and debit cards, it seems like it may take a while until mobile devices eradicate plastic.
With 550 million credit cards and 590 debit cards in circulation in the US alone, plastic cards are responsible for 75 billion yearly transactions, accounting for $4.7 trillion. However, the growth rate does show mobile eventually taking a more prominent spot in the future, especially since the majority of mobile solutions links directly to existing payment cards.
So who is responsible for mass adoption? Many believe it to be the banks, to which more and more are offering mobile payment solutions, giving users the ability to place contactless payments, transfer funds from account to account, and pay for goods online, but there are also “bank replacements” which offer a more robust and easy to use services.
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Google Wallet and PayPal are prime examples of payment services offering more than a simple payment gateway, or wallet service. Both firms in fact offer branded MasterCard debit cards linked to users’ accounts, bridging the gap between web-based payment services and conventional banking features. Dwolla also stands out as a standalone payment network, offering its own line of credit with no link to a user’s bank issued payment options or account.
Proprietary payment options are also proving successful in the US with coffee chain Starbuck’s mobile payment app bringing in 14% of payments, an increase from 10% last year. They card firms are not indifferent to the changes in people’s payment preferences either, with MasterCard, Visa, and American Express offering mobile payment solutions on their respective platforms.
One thing is sure, as more people are adopting smartphones; they expect the devices to make their lives easier. From being connected anywhere to transferring media and paying for goods and services, mobile devices are trying to replace everything in our pockets, including wallets.
What are your thoughts? Are mobile payments here to stay of just a passing fad? Let us know in the comment section below.
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