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Will smartphone payments outpace credit and debit cards by 2020?

Recent research has suggested that by 2020, credit and debit card payments will no longer be the preferred method of payment, with paying by smartphone taking over. If this expectation becomes reality it will signal a remarkable milestone in the meteoric rise of the smartphone.


While cash and card payments still currently dominate, there is a large possibility of alternative methods of payment, such as smartphones, becoming more widely used over the next five years as such devices, and the convenience they offer, gain favour among individuals.


The cashless society is an idea predicted to become reality in an ever shortening time frame, both by the media and in current industry blogs. Some reports have predicted a UK smartphone ownership level of over 80 per cent in 2015; will innovation in smartphone technology prove the final nail in the coffin of traditional payment methods?


Fraud fears


One hurdle currently blocking the rise of smartphone payments is people’s ever-increasing fear of fraud. Put simply, an increase in devices able to make payments will give fraudsters more avenues to attempt to steal information. Whilst banking and payment apps are by and large very secure, a compromised device can still leak vital login information through underhand malware.


While the modern day smartphone acts as a mini computer for many consumers, people tend not to regard the need for security on their phones as they would on their laptops. Infected apps offer a quick and easy route for hackers to gain access to smartphones, with the unknowing downloader having no idea that their device is at risk. The widespread adoption of the smartphone for banking and transactional purposes has been on the increase for a number of years now, however consumer attitudes towards smartphone security is currently lacking with our own recent research revealing that 60 per cent of smartphone owners having no antivirus protection.


While smartphone users may be mostly unaware of the need to install antivirus programs on their phone, smartphone payments as a relatively new payment technology means that there will naturally be some initial distrust around safety. There is however one recent technological development that may calm these fears earlier than predicted…




The introduction of a fingerprint scanner on new Apple products has undoubtedly brought biometrics into the mainstream this past year. The action of passing it around your friends to see if they can unlock your phone (and ultimately failing to do so) will go a long way to proving that the finger print scanner is a secure point of entry to their mobile devices.


Recently this has been taken a step further, with some lenders announcing that Touch ID will be an approved method for customers to sign into their secure banking apps. This is a huge step forward for biometric technology in finance, and we may assume that the other big banking names will quickly follow suit.  


The quick, convenient and secure appearance of the fingerprint scanner makes it an ideal catalyst for the growth of smartphone payments. The digital banking background is a war waged on convenience and fingerprint scanning may just be the beginning. Voice or even facial recognition could also play a part in future payments system, which combined with fingerprint scanning, could act as an even securer, yet still convenient, method of payment.


However, the fear of fraud has not been totally eliminated by the introduction of this new technology as there have been reports that several groups did actually manage to find a way around it. Of course, it may be argued that no technology is invincible, but that it’s a learning curve to finding the right equilibrium.


Whether these latest developments mean that smartphone payments will outpace cards by 2020 is still to be seen. What is becoming clear however is that we are only just beginning the scratch the surface of the potential of the smartphone as the new digital wallet.  



Comments: (3)

Melvin Haskins
Melvin Haskins - Haston International Limited - 01 May, 2015, 07:46Be the first to give this comment the thumbs up 0 likes

Your opening two words are 'recent research'. Who carried out the research and what was the profile and number of the particpants? Given the number of cards in use I suspect that the sample was 0.0001 per cent or less of the populace. That wonderful 60 year old book 'How to lie with statistics' by Daryl Huff comes to mind. I do see an increase in payment using a smart phone, but the idea that it will outpace cards in five years is outlandish.

This sounds like the previous arguments for the demise of cash.

Derek Garriock
Derek Garriock - Experian - Edinburgh 01 May, 2015, 09:14Be the first to give this comment the thumbs up 0 likes

The research mentioned was a consumer survey from Experian in conjunction with Opinium Research looking at consumer attitudes to payments technology. The omnibus survey was conducted amongst 2000 people and was split evenly throughout different regions in Britain to give a nationally representative sample. While obviously this is just a snapshot of consumer attitudes to payments I felt the point on smartphones was an interesting topic for further analysis and one that might spark some debate 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 06 May, 2015, 17:05Be the first to give this comment the thumbs up 0 likes

Outlandish claim given how almost every smartphone-based payment method today - including the most popular one, Apple Pay - uses credit / debit card as its funding method. Or did you really mean plastic when you said credit / debit card? That would make the claim slightly less outlandish.

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