Did you hear the bold prediction made by online payment giant PayPal earlier this year? After surpassing 100 million active accounts around the world, the company's president talked about the short term future of digital wallets and mobile payments.
"As the trend toward digital currency continues to gain momentum, we are focused on delivering solutions that are not just new and different, but better than what is currently the norm today," Scott Thompson said via the PayPal blog.
"We believe that by 2015 digital currency will be accepted everywhere in the U.S. - from your local corner store to Walmart. We will no longer need to carry a wallet."
Since people living in countries outside the United States are more likely to use mobile payment technology now, Thompson's forecast may be a surprise to many Americans who have been somewhat slow to warm to the idea of digital wallets. But part of the extended adoption period is the lack of options and infrastructure on both the consumer and retail side. And with the advent of several new digital payment options, that may be changing.
You may have seen Google's recent entry into the mobile payment arena, and not surprisingly, more of the industry heavyweights are entering the ring. Now PayPal, Visa, and American Express each have introduced digital mobile payment products, realizing that an increasing number of consumers are ready and waiting to spend, both online and in brick and mortar stores.
Mobile payments made via the point of sale (POS) depend on both consumers and sellers for success, as both chip-based phones and upgraded POS terminals are required to complete transactions. And credit card companies and large banks must support both sides by creating the mobile applications and making the connections behind the scenes.
But as more and more smart phones with the near field communication technology come to market, mobile payments won't just replace the credit, debit, and cash payments being made at gas stations, grocery stores, malls, and movie theaters. Instead a whole new world of mobile payment opportunities is expected to open up, even for consumers who have traditionally stuck with cash.
Customers can pay or get paid via email, make online purchases via mobile phone or computer, and exchange money with others by simply tapping smart phones together.
Sellers can accept mobile payments more easily, while assuring customers of transaction security.
And organizations like non-profits can use the mobile payment platforms to amplify fundraising efforts and keep causes top of mind with potential donors.
Here's a little more about the three most recent entrants in the mobile payment arena.
PayPal: A pioneer of nontraditional and online banking, PayPal apps for the iPhone and Android offer person-to-person mobile payments, and the ability to bump phones, exchange contact information and send or receive money. You can also send and receive payments via SMS (text message).
Currently dominating the world of online payment processing, PayPal ventures into the fray in the physical retail space, developing technology that gives consumers the ability to pay at the POS by entering their mobile phone number along with a prearranged PIN.
American Express: If you spend any amount of time online, you've probably seen plenty of advertisements for Serve, the mobile payment solution from American Express. Currently offering a $10 bonus when you set up an account and send money via email, Serve is described as "a next-generation digital payments platform that helps you organize your money, send and receive funds, and manage your payment requests - all from a single, unified, online account."
With accounts currently limited to residents of the United States, for use within the confines of the U.S., Serve connects the security and strength of American Express with more nimble and nontraditional payment options. It seems like the perfect opportunity to connect with many consumers who have never used their products before.
Visa: Scheduled to launch in 2012, V.me, Visa's version of the digital wallet offers many of the same features as the Google product. Touted as "a new service that allows you to shop without sharing your card account information with the seller when you pay," V.me facilitates mobile payments either at the retail POS or via mobile interface.
You set up an account with a secure username and password, and link it to one or more of your major credit or debit cards. Additional features such as mobile payments, sending and receiving money, and donations to your favorite charity are in the works.
Although payment methods using chip-based smart phones and near field communications still seem a long way away, these new players in the mobile payment space seem to be opening variations on mobile payments to many more consumers. It's a fast changing technology area and one that bears watching in the short term.
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