Cash Refresh: The Ecosystem of Mobile Payments

A byproduct of digital business is that transactions require more advanced and streamlined payment options. PayPal was one of the first to recognize this. Square took the concept to an even higher level with its Cash app. Now Apple Pay, Android Pay and others are advancing the concept.

I love pulling out my iPhone and using my thumbprint to pay securely for a Groupon purchase, retail transaction or vending machine purchase. This is what digital transactions are supposed to be about.

Now Apple has announced that it is taking Apple Pay to the Web. The system will prompt for the purchase via the Touch ID on the iPhone or on an Apple Watch. In addition, it will build payments into its iMessage app. This is similar to what Facebook is already doing with Messenger, and Snapchat does it in its app.

This is good news for consumers, who steer clear of tapping and pecking their way through a series of screens on the way to a purchase. But it’s also great news for savvy retailers and others, who can streamline transactions and create entirely new opportunities to sell things.

A WalkerSands Communications report, Reinventing Retail: What Businesses Need to Know for 2016 Whitepaper, notes that alternative and mobile payment systems are taking root. Millennials are leading the charge. Nearly two-thirds (64 percent) of 18- to 25-year-old consumers made a mobile purchase over the past year, compared with only 25 percent of consumers 61 and older.

Overall, 36 percent have used some sort of mobile payment application in the past year. That’s up about 6 percent from the previous year. However, the WalkerSands report also points out that U.S. mobile payment transactions are expected to triple in 2016 to $27 billion. This, it notes, is “a sign that a few eager early adopters and the growth of Apple Pay could eventually force more widespread changes in consumer behavior.”

Already, Denmark has taken a step toward becoming the world’s first cashless society. The government has proposed eliminating requirements that retailers, restaurants and others accept cash in order to reduce costs and boost productivity. There, about one-third of the population already uses a Danske Bank app, MobilePay. A similar system, Paym, is making waves in the UK.

Make no mistake, the writing is on the digital wallet. We’re moving toward e-payments and, as a CIO, you should be thinking about how to streamline transactions, improve customer experience and introduce ways to make the concept pay.

Samuel Greengard
Samuel Greengard
Samuel Greengard writes about business, technology and other topics. His book, The Internet of Things (MIT Press) was released in the spring of 2015.

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