Mobile Phone Payments Will Replace Cash And Credit Cards By 2020
A majority of Americans will make payments using their cellphones, rather than cash or credit cards, by 2020, according to a survey of experts released on Tuesday by the Pew Internet and American Life Project.
Nearly two-thirds of those responding to the survey (65%) said they believed most people will have “embraced and fully adopted the use of smart-device swiping for purchases they make,” within the next 8 years.
These respondents also agreed with the statement: “People will come to trust and rely on personal hardware and software for handling monetary transactions over the Internet and in stores. Cash and credit cards will have mostly disappeared from many of the transactions that occur in advanced countries.”
Many such “mobile wallet” payments are already here today, including apps such as Google Wallet and other tools such as Square, which converts phones into mobile cash registers.
These payment methods, and others like them, nearly eliminate the need for cash or credit cards.
According to a December report by data measurement firm comScore, 38% of smartphone owners had used their phones to make some kind of purchase.
The findings released Tuesday are consistent with a previous Pew poll, which found that one-third of smartphone owners had used their phone to conduct some sort of banking, while nearly half (46%) had paid for an app with their phone.
“There is nothing more imaginary than a monetary system. The idea that we solemnly hand around printed slips of paper in exchange for food and water shows just how trusting and fond of patterned behavior we human beings are,” said Harvard University professor Susan Crawford, one of the survey participants.
“So why not take the next step? Of course, we’ll move to even more abstract representations of value,” said Crawford, a former special assistant for technology policy for President Obama.
While the majority of survey participants agreed that mobile payments would be ubiquitous within a decade, roughly one-third of the experts said they did not believe a major conversion to “all-digital, all-the-time” payments would take place by 2020.
Many cited security concerns as the primary obstacle.
“The use of a simple string of digits that must be shared with any vendor with whom you transact is really a ludicrously insecure system that can and must change,” said Peter McCann, a FutureWei Technologies senior engineer.
But advocates of mobile payments say that while the technology is still evolving, such payments are no less secure than other methods, such as credit cards, that most people use today.
Pew said that most of the experts who believe mobile payments will dominate in the years ahead cited growing rates of smartphone ownership, convenience and security as key factors that make “these systems an obvious choice to replace established modes of payment in day-to-day commerce.”
“As adoption of advanced mobile devices such as smartphones has exploded in recent years, consumers have grown increasingly comfortable using their phones to transfer money, purchase goods, and engage in other types of financial transactions,” Pew said.
Some of the survey participants believe the most likely scenario will be a mixture of both old and new payment methods.
“When credit cards arrived, checks did not disappear, and neither did money,” said Amber Case, CEO of Geoloqi.
“Some systems may emerge that use completely smart payments, but there will still be other forms of payment available.”
Pew’s full report, entitled “The Future of Money in a Mobile Age,” can be viewed here.