Mobile payment systems have arrived and will only penetrate the market more as time goes on. The number of FinTech companies out there capitalizing on this market is growing, and financial services companies should be embracing them to ensure their edge over competitors.
Near field communication (NFC), the technology that makes mobile payment possible, came to the mass market in 2010, and Google quickly made use of it with Google Wallet in 2011. The excitement for mobile payment didn’t take off until a year ago when Apple released Apple Pay. Starbucks, though, built a loyal base of users of its own mobile payment system with relatively little fanfare. Comparisons abound between Google Wallet, Apple Pay, and even Starbucks. With Apple and Google battling on the consumer side, companies like Square and PayPal Here have been dominating the business side of mobile payment quietly for 5 years now.
Meanwhile, smaller companies like Swyp, Coin, Stratos, and Plastc are all racing to get their all-in-one cards to market. All four of these fintech startups promise consolidated cards: credit, debit, loyalty, gym, and even some access key cards. Bluetooth powered, these cards utilize the owners’ mobile phones to access specific data regarding their cards. While each are a variant on the the same theme, they all have a proximity security feature; if the cardholder’s mobile phone moves too far out of range of the card’s bluetooth, the card locks down.
The moral underneath all of these new ventures is that mobile payments are the next wave of digital innovation in finance. As technology makes it easier to use phones and electronic cards more securely, the market for streamlined payments will only grow larger.
The Next Steps for Financial Services
The easy choice amid all these potential game-changing options is to sit and wait to see which technology comes out on top. It’s certainly much cheaper to play the waiting game. However, this will inevitably lead your institution to fall behind the pack.
If you want to lead the pack, the best bet is to make multiple bets. Obviously, placing all your money on one horse won’t lead to success, especially when technologies are yet to be proven. Hollywood Studios like Magnolia Pictures certainly didn’t lose any sleep when the market decided in favor of Blu-Ray over HD DVD — Warner Bros. and Paramount can’t say the same.
Ensuring your institution stays relevant in the digital commerce means staying top of mind for customers when they go to make their purchases. Whether a consumer is pulling out their wallet or their phone to make a purchase, what influences their choice of card remains the same: rewards, discounts, benefits.
Banks and finance institutions alike don’t need to have their own new tech to ride the new wave in digital commerce. With a few simple steps, they can place themselves at the front while exploring their own digital and mobile payment solutions.
By starting communication and customer education early, firms can begin the buzz around new payment technology. Highlighting the current security features will reassure customers that their information and money is safe. Banks should also publicize their support for digital wallets, and leverage social media to feature their own product offerings. As with any product that handles money, consumers will have many questions.
Strong preparation for them will assuage any fears and encourage early adoption.
Consumers will always look for easier ways to pay for goods. Mobile payment systems are the next step in a long line of payment evolution that started with barter. Embracing these new developments sooner will mean the difference between exchanging seashells or paper money.