Technology-wise, we have grown tremendously in the recent years. Today’s generation doesn’t even know what a floppy disk is! Talk to them about cassettes and they will look at you like you are mad. Who can blame them? Disks and cassettes are old technologies. No one even misses them anymore! Are we going to talk about credit cards and debit cards like this in the future? Are they going to be obsolete soon?
With technology taking leaps every now and then, we never know what’s going to supersede which technology! In the age of smartphones, we are all spoilt. We all want convenience and immediacy. None of us, for sure, likes to wait. While cards don’t usually make us wait, wouldn’t we be more than happy if something more convenient came up? Of course. That’s what mobile payment is doing to us. Many companies are now tilting towards mobile payments, eliminating the need of cards altogether. Research has also shown that mobile payment has significantly gone up this year. That’s because you can make payments with simple taps on the smartphone. You no longer need plastic in your wallet! This is giving banks a definite run for their money already.
Last year, Gartner conducted a comprehensive research. According to the results, they deduced that mobile payments would probably go up to a surprising $720 billion a year. That’s a rocket launch when compared to $235 billion in 2013. PayPal is the pioneer of mobile payment solutions. It holds a whopping 78% market share and processing close to $46 billion in mobile payments in 2014 and the number is just expected to increase in the coming years. Then there is Google Wallet which is steadily moving up. It holds a 5% market share and comes pre-installed in plenty of mobile devices so users can get started easily. The latest entrant is Apple pay which grabbed a whopping 1.7% market share in just 6 weeks of it launching. Not bad considering it’s available only on Apple devices.
Apple’s latest products iPhone 6 and iPhone 6S are equipped with this feature. It makes payments a breeze. The Passbook feature lets you store your cards virtually. The best part is that the card number is never stored. Therefore, even if the phone is lost, data is safe. Plus, Find My iPhone is an excellent feature that lets you suspend all transactions from the device. What else could you ask for?
Definitely, there are some who still like the idea of carrying cards. They are comfortable with them. They also find them safer. However, with giants including Apple encouraging mobile payments, we think that will be the norm in the years to come. Cards will perhaps continue to be common but their importance or relevance may decline overtime. In the coming 5 or 10 years, we don’t expect them to be wiped off like floppy disks but there will be a gradual landslide and may be many years down the line, old people will fondly remember making payments using plastic cards.
Banks and big players have already understood this, which is why they are trying to fight the competition. They are coming up with strategies online and offline to attract customers and to retain existing ones. Digital wallets have become more popular than ever. They are trying to do whatever it takes but we doubt this friction will do them any good. Their main reason is the fact that card payments fetch them more rewards. Things may not be so profitable with mobile payments. However, the question is whether they will still stay put if they start losing customers to this new trend. The smart players are already accepting change while the others will hopefully join to save their businesses.
The bottom-line is that in the near future, we may not see a dire effect on card payments. The shift is expected to be glacial but definite.