For Finextra's free daily newsletter, breaking news and flashes and weekly job board.
By 2014, mobile and Internet technology will help over 3 billion of the world's adults to electronically transact. Emerging economies will see increase in mobile and Internet adoption through 2014. Worldwide mobile penetration rate will get to 90%. - "Gartner's
Top Predictions for IT Organizations and Users, 2010 and Beyond: A New Balance"
1. You (already have or) will get a mobile.
2. You'll use it to transact - everywhere.
3. Mobile transaction systems will compete and one will dominate. It won't be an iPhone or any other proprietary phone manufacturer's system. It won't be the telco providing it and it probably won't be
your bank either.
4. Ease, security, cost and merchants will drive uptake of whatever transaction system dominates, and one will.
5. By 2015 cards will have all but disappeared except for the holdouts who end up costing the card networks too much to support. Mobile will outservice and for the merchants - outprice it (and price will influence especially when adding in the real costs
- like PCI compliance, breaches - in spite of, etc..)
Time will tell.
'More's Law' on fraud
Do you honestly believe that in 5 years 'cards will have all but disappeared'?
This is the boldest of your claims yet. Mobile and Internet will continue to grow, I have no doubt in that but for cards to be replaced in such a short space of time, I don't think so.
I find it hard to imagine anyone issuing cards with new accounts after about 2015. If 90% of the people have mobiles it would seem a waste of money to be maintaining card networks. If you can imagine a mobile way of doing the card things then it is very
easy to predict that cards will fall by the wayside.
While I'm sure many people are still being issued cards I doubt it is as many as the number who are voluntarily purchasing mobiles.
It is clear that mobile penetration is exceeding card and reader penetration. It would make no sense to keep issuing them and building the unnecessary infrastructure, although some brands will have to maintain their networks until they can wean their customers
over to mobile.
I have yet to hear any rational argument as to why people will not switch. There will then come a period of consolidation and perhaps market domination if some provider is able to stand out.
Mobile usage is definitely on the up - thats plain to see to anyone. Whether or not you can tie the increase in usage to the death of cards is questionable.
I, for example, have two mobile phones yet have never used either for performing any transactions - not even online banking. Banks and payment schemes are slow to adopt new technology so even supposing there is a solution that is fully mobile I cannot see
the Banks replacing their use of cards in 5 years time. I know (think) your model doesn't involve banks but I don't see a new entrant coming into the finance space and having such a major impact in such a short window, without collaborating with Banks.
I also cannot see the majority of the population adopting this method of payment in such a short space of time. I am fairly 'tech savvy' but I wouldn't use this method of payment in place of my cards. I may use it as a companion product for certain circumstances
but I cannot see the day when I would have a wallet containing no cards. Nevermind my parents and the rest of their generation who are still coming to terms with paying by plastic.
My children are of pre-school age, I predict their generation will still have cards and cash as the dominant payment method.
I too have two mobile phones - both with web connections - yet have never considered making financial transactions using them because I simply don't trust them as secure devices. Anything that is connected can also be infested as far as I'm concerned - look
at the idiots that tried to unlock their iPhones and in doing so switched off the security. Hmm credit card app for iPhone anyone?
The place that I still struggle, where NO-ONE has been able to put up a convincing argument, is as Joe suggests, just because 'everyone' has a mobile phone, why should they use it for banking? After all, 'everyone' has a finger don't they? Including all
of the people that in Dean's eyes are too poor for the payments system to worry about.
What about keys, that's something I never leave home without, why not base banking on keys? After all, according to my lock manufacturer, they're security cut with a laser so that no-one can copy them and I've got at least seven levers. BMW took up this
idea with their PayPass key, I think it'll catch on...wait, poor people can't afford BMWs...
Or how's about shoes - oh no, poor people can't afford them either.
Teeth? Damn, excludes old people.
Plain and simple, the card infrastructure is what it is because it suits the business that is going on. Mobile phones don't - in fact in order to implement a ubiquitous payments system based on them we'd have to wait at least another 20 years for the banks
to rebuild their infrastructure. Think about how long the magstripe has been retained - and the Americans still think that's a pretty nifty idea...
I agree with Ainslie and Joe. To imagine cards disappearing even in 20 years is non-sensical.
You ignored my two substantive criticisms of phone vs card from last week, so I will repeat them:
1. Using a phone in mercantile transactions is not free of extra hardware and transaction overheads as you imply. A phone will not communicate with a terminal by magic. You will either need to go through the network -- and pay -- or you will need to upgrade
the terminal with NFC or something. So your criticism of smartcard readers on cost grounds is unjust. In any event, card readers in retail are near ubiquitous already.
2. You cannot use a credential on a phone to authentciate yourself to a human. So all those scenarios where you're using a credential like a driver licence, health card, ID card, seniors card, proof-of-age card, airline club card, etc etc. still demand
a piece of plastic. Humans can trust plastic cards because they have tamper evident features, special printing, holograms, photos etc. that can never be realised -- almost by definition -- on the screen of a phone. What could possibly make the image of my
driver licence on a screen trustworthy by inspection? So as I said before, e-credentials on a phone can only ever be used in a machine readable mode. For human readable credentials, you still need a card.
How about paying with your thumb? It's another thing you always carry with you.
Do you eat nuts out of a communal bowl in a bar?
Just so long as you're there with a sterile cloth cleaning that reader before I place my thumb somewhere someone else's thumb has been (and it's probably beeen where I don't know or wish to go:)
But seriously we all know that fingerprints aren't 'false positive' proof enough and in too many cases 'just plain don't work' and it's really all about having another piece of equipment (and network) you don't want or really need (in case you might suggest
thumb blood vessel scanners which can like all fingerprint scanners be fooled.)
Biometrics are really bumometrics - you're just sendiing a 'picture' of your thumb or something else, and any place you get it scanned will have a 'copy' available for hackers to intercept and reuse and its impossible to replace if compromised.
Entirely unnecessary but perhaps buying all that kit might stimulate someone's economy - but whose?
This post is from a series of posts in the group:
A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.