Mobile payments replace cash in the future? See the benefits generated for banks!

The report, “Mobile B2X: The Next Mobile Payment Wave in International Markets,” said that mobile payments in the new mobile business-to-exchange sector have great probability to succeed because it will address numerous pain points that have plagued cash for decades such as high processing and handling costs, security concerns and the need to spend considerable time to access it. 


But are mobile payments going to replace cash or credit by the year 2020?

The Elon University's Imagining the Internet Center has recently conducted a survey, which get 1021 Internet and tech experts and users involved. Among them, sixty-five percent of participants responded that they believe by 2020, most people will have embraced and fully adopted the use of smart-device swiping for purchases, nearly eliminating the need for cash or credit cards. However, 33 percent expressed their concerns regarding both privacy and security of the information.

We don't know yet.

However, currently, the benefits including increased security that people don't have to risk inputting their credit card information over and over again, increased convenience that purchases can be done with simple scanning within a blink of an eye and higher sales have been brought by mobile payments. Chances are that, once businesses start to adopt mobile payments, transaction volumes are expected to increase drastically.

With credit cards, banks can definitely extend their line of credit to different individuals for NFC and other mobile payment use. Banks will be able to offer new treasury and cash management services that let commercial clients’ payments or receivables be pushed through the mobile channel.

Increase Market Penetration

Market penetration of the banks are increased by going for the underserved customer segments and then growing the total revenue pie. In other words, mobile business-to-exchange payments represent new revenue streams for banks and an opportunity to break the carrier’s stranglehold on mobile payments in unbanked countries. Also, mobile banking can serve primarily to reduce the cost of deploying customer touch points into lower income or more remotely located population segments.

Reduce cost of service provision

From the cost perspective, the cost of bank service provision has been largely reduced, putting great emphasis on bottom-line over-line growth. Cutting costs is not only about seeking lowest cost position in the market but also deterring competitors from engaging in value-destroying price wars, thereby protecting the revenue base. So replacing more expensive channels and devices with the comparatively cheaper mobile solution is fundamentally efficient and sustainable. One potential challenge would be for mobile carriers and banks to build up their cash-out agent networks, as despite the growth of mobile payments.

I just came up with a good example. News came out yesterday that Barclays enlists NFC tags to enable mobile payments. Barclay’s payments division Barclaycard has introduced PayTag, which is a near-field communications tag that users can stick to the back of their mobile phones. By holding a phone outfitted with PayTag over a contactless payment terminal, users will be able to pay for purchases up to 15 British pounds, or approximately $24 U.S. dollars, via their Barclaycard Visa credit card account. Beginning in June, users will be able to make purchases of up to 20 British pounds, or approximately $32 in U.S. dollars. In all, Barclays bank is giving customers a way to pay for small purchases with their mobile phones at a variety of merchant and transit locations, exploring new ways of business and changing people's life influentially.

There is a video regarding Quick Tap with contactless payments from Barclaycard. Enjoy!!

References:

1. Report "Mobile B2X: The Next Mobile Payment Wave in International Markets", Retrieved from: http://www.celent.com/reports/mobile-b2x-next-mobile-payment-wave-international-markets

2. Are Mobile Payments Going To Be Bigger Than Cash Or Credit By 2020? Retrieved from: http://consumerist.com/2012/04/are-mobile-payments-really-going-to-be-bigger-than-cash-or-credit.html

3. Barclays enlists NFC tags to enable mobile payments. Retrieved from: http://www.mobilecommercedaily.com/2012/04/20/barclays-enlists-nfc-tags-to-enable-mobile-payments-for-customers