Mobile payments in 2016: RIP plastic cards?
 

My friend (financial journalist) is quite consumed by Visa/MasterCard marketing; the basic claim is that by 2016 we will all pay by our mobile phones.

MasterCard recently started it's pilot projects around Europe: PayPass in NFC capable mobile phones.

What is your realistic outlook on the future of payments, without marketing bias?

My reservations with the issue:
- Different market participants with different interests (Apple will not put NFC into their mobiles)
- My guess is that airlines with their frequent flyer programs will not be interested in scraping plastic cards as well (guess why)
- If you are like me and let your mobile run out of battery you will not be able to pay as well. That is not in the interest of the parties involved. (I have found the inner contradiction!)
- AMEX's position? I don't know.
[- Real innovation happens around BitCoin and other alternative providers, and the big players, Visa, MasterCard and banks just trying to catch up with their 100 year old business models (50 years in the case of plastic).

It is a common critique to banks that their business model is just 100 years old, doesn't really hold well in the digital age.

If I remember correctly, this was a good one: http://www.youtube.com/watch?v=T9EI2PrDpmw]

:rolleyes:

America hasn't adopted,widely, the latest CC innovations. Abandoning ship for the phone seems like an utterly irrational proposition.*

*In the stated "in 2016" timeframe.

2016 is awfully optimistic.

It might make it easier to abandon ship as they'll be leapfrogging the difficult (apparently) chip and PIN adoption issue. However, 2016 is only 2.5 years away so it seems unlikely that cards will disappear by then. And there's always the flat battery issue.

I have no doubt though that various mobile and touch payment systems will be more widespread by then and card use will decline as a result. Or for poorer areas, leapfrog the whole card thing, as is happening in Africa.

With these kind of predictions, I always like to backtrack and see what was being predicted an equivalent time ago.

Here's The Guardian in 2010 saying that it might all be happening by the time of the 2012 Olympics . Did it?

Here's the BBC in Feb 2013 saying "eight years"

Well of course the CC companies are hyping it - cheaper for them if they don't have to send out physical cards.

Won't happen

In addition to the major phone brand not adopting it as already mentioned...

Inertia - we still have the cent and dollar bill

Legal - 15 USC § 1643 - Liability of holder of credit card - talks about "the card" not some electronic code.

Contractual - "sight of card" transactions have lower costs because the CCV code is physically on the card not electronic. How do you replicate that?

Distribution - how are you going to get that "card" on your NFC chip

Support - their app has to work on every android phone out there and V/MC become primary support for ANYTHING wrong.

He is full of crap. The assumption everyone will have a cell phone and "smart" at that is simply wrong. And a 5th grader could tell you that.

Your phone doesn't have to be very "smart" to do payments. Many of them are very simple and can be done with Bluetooth or text.

I don't fancy it. What happens when your phone gets lost/stolen? I like having different things in my pockets for different purposes, minimises potential losses. I'm not convinced contactless payment is secure either - whcih reminds me I should ask my bank not to send me a contactless card when my existing one expires next month.

I doubt everyone will be using their phone as a payment card in 3 years or 10 years for that matter.

This however is an interesting use of the NFC technology and one I'm sure would be much easier to implement.
http://www.bmo.com/home/personal/ban...mobile/paypass

Fully Agree. Even in Japan where they have been using pay by phone type transactions for quite a while, most people use their phones only to pay for low cost products, like fast food, coffee, etc.

I don't see mobile payments becoming the de facto payment method any time soon, at least in the United States. I do think that we'll see more offers or coupons that can be linked to a payment/credit card on mobile devices - and I think that this is the scope of mobile payments moving forward. Apple's Passbook is a good example, and other companies (Dunkin' Donuts' springs to mind) allow you to link location-specific offers to a payment card at the point of sale.

Are you kidding? In Japan, most people still use cash for everything.

To say nothing of the fact of the huge illegal/underground economy, which is pretty much on a cash-only basis.

I remember asking my eco prof how one would go about buying a prostitute or a nickel bag without cash. The poor dear had apparently grown up in a somewhat sheltered environment, since he seemed shocked/puzzled by the question.

Only pay by phone? I wonder how/if that would work when I go overseas? I already find that I have to sign when using my CCs in the UK, because from the UK pin and chip doesn't check my balance in NZ.

Roaming charges from my pohone service provider would be steep. too.

I'll stick with the plastic!

One does not buy a prostitute they merely pay for services rendered. As for a nickel bag that is just a sampler. :D