Phone Purchasing

Phone Purchasing April 25, 2012

By Doug Gross:

How about you? You for this? Against this?

(CNN) — Most Internet users and tech experts think cash and credit cards will become things of the past in the next decade as people turn to their mobile phones to make payments, results from a newly released survey suggest.

Nearly two out of three respondents to the survey (65%) told the Pew Internet & American Life Project that they think most people will have fully adopted the “mobile wallet” as their day-to-day means of paying by 2020.

Whether it’s paying for coffee with a mobile app, using more versatile apps such as Google Wallet or doing business using tools such as Square that turn phones into mobile cash registers, the adoption of mobile payments is clearly under way…

And it’s a bit more theoretical too:

In the survey released Tuesday, 65% of respondents agreed with the following statement:

“By 2020, most people will have embraced and fully adopted the use of smart-device swiping for purchases they make, nearly eliminating the need for cash or credit cards. 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.”

Survey respondent and Harvard University professor Susan Crawford wrote, “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.”

Crawford, an ex-special assistant for technology policy for President Barack Obama, asked, “So why not take the next step? Of course, we’ll move to even more abstract representations of value.”



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  • RJS

    I think this will take a share of the market … fully adopted 8 years from now? Probably not. Eliminate credit cards and cash? Probably not.

    If it does it will be because it works “that well.”

  • Clearly this is the next step toward the cashless society the Antichrist will use to subjugate the world.

    No, I’m not serious. But I would have been, about 15 years ago.

  • Fully adopted by everyone within 8 years might be pushing it. If you pushed the question to say by 2030, 2025 even maybe, I’d say definitely yes because that’s close to a full generation who would have grown up with the possibility to pay with their phones (or other mobile devices). A lot of these technologies that replace an existing one, as opposed to being a completely new function, often take about a generation to really get a foothold – eBooks are probably in the same boat, maybe a bit longer because a lot of people have an emotional attachment to the feel of books. By 2020? I could easily see every store having the capability by then, but I think at that point there will probably still be a good number who prefer cash or cards.

    The technology is already there through NFC and is in a lot of smartphones (many Androids, some BlackBerries). It is already a fairly big thing in Japan but has taken longer to get a hold in North America or Europe.

  • T

    I’ve never taken credit cards for my law practice until this last month, when I realized I could do so through my phone with free hardware, free app, and small per-transaction charges. I’d say making and receiving payments via smart phone will be widespread very soon.

  • Jon

    My guess is that paying by device will be the norm within 5 years, replacing plastic but not cash.

  • Stephen

    Paul A. – are you saying that the anti-christ came 15 years ago?

    that cracked me up.

  • Prodigal Daughter

    Starbucks and Apple are already taking payment this way.

  • gingoro

    I have not seen any of the proposals in much detail so I am guessing as to how phone payments might be implemented.

    I’d want to see what security looked like on the devices before I would consider their use. And then I would not be an early adopter but would see how the security system works in practice. In other words I would let the eager beavers take the security risks before I jumped in so I would wait till at least 60% of the population was using these devices.

    I find that I can manage not to loose a wallet very often but if I have to carry two items each of which must not be lost it gets much harder. I’d want all my other data that I need to carry, like my drivers license, bus pass, health card…, to also reside on the device so that I only need to be responsible for one physical object.

    Another issue is what happens when the device crashes or breaks? In this case do I loose all my identification and money?
    Dave W

  • In Kenya, paying by phone (M-pesa) is already quite popular. It’s not quite the same system, but I believe they had more transactions within Kenya last year than Western Union globally. You can even pay your church tithe by M-pesa now.

  • RJS

    In Israel in 2001 we encountered a vending machine that worked by phone payment. As we had no cell phone it led to frustration.

  • Canada is already preparing.

  • RobS

    The goal for vendors is to make it easy. By having little emotion in the transaction, there is no “pain” in spending. This is why people feel different spending cash and watching it disappear versus swiping a credit card.

    Credit card companies & vendors know people will often spend more with the more intangible methods — so vendors are not excited, but not totally dismayed to pay the CC companies a bit more. I expect they’ll get on board with this soon.

  • It’s how always I buy my coffee at Starbucks, and I’d buy my groceries this way in a minute, if the grocery store had the capability. People are still a little slow to do banking online and with smartphone’s, but because those modes are increasingly gaining ground, I believe resistance to smartphone purchasing will be slight. Eight years may be generous. Could be five. We’ll still have credit cards, though. Enough people using them now will never make the leap.

    Biggest concern (honest to goodness): Will I keep getting airline miles?

  • We do know that it’s the U.S. retailers who have been holding up progress on this. They don’t want to spend money on new equipment.

  • barb

    Think of the new way of collecting the weekly offering when we all just get out our phones during the offertory. I know many churches have on-line giving already. I don’t go to one. I have a check book for that one purpose

  • I live in rural Africa and — already here — the majority of people are carrying their money on their cell phones. There are no swiping machines in stores (of any sort, not even credit cards), but lots of people pay for things by “texting” money to the recipient. What might be most interesting is that the vast majority of people have never had a bank account. They went straight from cash to phone payments in much the same way they went from no phones to cell phones.

  • DRT

    I have been involved with the credit card industry for close to 20 years now and personally was involved in developing the online internet processes that are now prevalent. I also ran the effort at a credit card company to put the micro chips in credit cards.

    The phone as payment vehicle is much more widespread in Europe and other parts of the world. Americans are woefully behind the times in so many areas and yet we somehow believe that we are always on the forefront. Not true

    All the major credit card companies have big organizations dedicated to making the phone revolution a reality right now. They are not only doing it for payments, as stated, but also for accepting checks. You can now take a picture of a check that someone hands to you and that will be your deposit.

    Many of the ATMs are now image based where you feed your checks in and they simply scan the check. The checks then go off to some warehouse were they are never even used. It is all image based.

    This image based infrastructure is what is allowing the phone apps to become a reality. It cuts down on processing costs and increases security (though I am pretty sure that is counter intuitive to many out there).

  • As an interesting aside, this technology is already well established in places. However, it is not in the high-tech circles in the West, but in many African nations where far more people own cell phones than have bank accounts. Paying for things with a cell phone is normal practice for many people on that continent.