Forget your wallet…pay with your phone?

13th January 2014

Mobile payments have been threatening to be the next big thing for some time now, but in 2013 it made real steps to making payments easier, both online and in-store.

As the amount of purchases made through smartphones and tablets continue to rocket, consumers don’t want to repeatedly enter their payment details using small keypads, whilst retailers don’t want to give them any excuse to abandon the sale having worked so hard to get them to checkout.

Thanks to Near Field Communication and Bluetooth Low Energy, digital wallets can also be used for payments offline, in shops, cafes and restaurants. The technology allows mobile devices to communicate with in-store systems to make instant payments without the need for pin numbers or signatures.

Digital Wallets

A host of start-ups are looking to compete with tech giants Google and PayPal and cash in on digital wallets, which allow card details to be safely stored and used for payment without having to re-enter information.

eBay-owned PayPal is used by thousands of online retailers and is the market leader in online payments, having had a huge head start. In 2006 eBay banned the use of any online checkout for payments other than PayPal, which to date has transacted at total of $145billion of eBay sales.

PayPal’s integration with retailers own mobile applications is also speeding up the entire buying process. The KFC app allows users to order and pay for their food with PayPal before they even get to the restaurant, making food ready for collection as soon as they arrive.

Google Checkout, launched to rival PayPal and initially offering fee-free transactions, was discontinued in November, with services replaced by Google Wallet. The app is looking to take a lead in the offline market and can be used to make payments in over 300,000 US locations.

Parts of cloud-based mobile payment firm GoPago were recently acquired by Amazon, furthering rumours that they will soon be launching an easier way of making payments.

Most major credit and debit cards are now using contactless payments, allowing the user to swipe the card over the card reader and pay almost instantly for products up to the value of £20.

Contactless money

Barclays ‘PingIt’ uses an alternative form of sending payments, requiring only the recipient’s mobile phone number. It can be used to send money to both people and businesses and now allows use from non-Barclays customers.

PayPal is developing its Beacon, which allows retailers to plug in a Bluetooth device that sends out a signal to anyone in the store using the PayPal app. From here they can open a tab, receive offers and ultimately pay for their products.

Contactless devices are already being used in other ways such as Oyster cards and tickets for sport and music, something which the technology giants want to replace with a mobile device. Apple’s Passbook, which can store payment details, vouchers and tickets has yet to set the world alight, but is still a default App on the iPhone.

Fans of digital wallets have no doubt that we will soon be leaving our bank cards at home and using a smartphone for tickets, vouchers and payments, which is all well and good until you lose your phone, the battery goes or there is no phone signal.

In the meantime, 3Squared offer affordable online payment solutions for businesses that are secure, scalable and great value for money. Get in touch with us today.

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