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The Future of M-Payments: Prosperity or Failure?

What is the m-payment? The m-payment is considered to be the money transaction made or received with a mobile phone. Using smartphones for m-payments is nothing but a logical forward way of thinking, right? 

We all have our devices at hand most of the time and there is an app for literally everything. Recent fintech introductions by ApplePay, Samsung Pay, Android Pay and others have the same drive. Though, m-payments are not catching on with people as much as expected. Why so?

A report from IEEE states that by 2030 m-payments will overtake traditional payment methods. To be accurate, the statement is based on 70% of the respondents’ belief that “by the year 2030 m-payments will be secure enough to overtake the use of cash and credit cards.” While TrendForce reveals data that total revenue of mobile payment market in 2015 reached $450 b., and by the end of 2016 it is estimated to reach $620 b, representing annual growth of 38%. Pretty bold headlines!

Image: Lydia app
Image: Lydia app

Despite such impressive statements, it turns out not everyone is enjoying it. Yes, it is obvious that buyers like the convenience of mobile shopping, and they are realizing their phones could be used as a payment device. But have they started at once using Apple Pay or another mobile option? Well, not that much.

Concerns of M-Payments

Since introduction the market of m-payment has grown just by 1% yearly. A clear sign that users simply are not happy about it. Still, not entirely clear the reasons for that and the number of concerns is quite large. The report mentioned found the following concerns among respondents:

  • payment information hacks – 46%
  • unauthorized payment processed by a provider – 33%
  • accidental payments – 13%
  • viral infection through QR code – 8%

Survey respondents also ranked the platform from least to most risky:

  • web browsing – 34%
  • email – 47%
  • social networking – 48%
  • syncing to cloud – 53%
  • banking/mortgage information – 60%
  • online banking – 72%

Arguably, the biggest concern of mobile payments is security. More than a half of US internet users cite security concerns as the main reason of hesitation. Another issue is the lack of global standard and international compatibility. Until common interfaces are defined users are not going to engage in m-payments fully. And once a global standard is adopted, users will be able to use mobile apps to make purchases.

Want to know more about those standards?

by ThinkMobiles
by ThinkMobiles

Mobile technology remains fragmented. Merchants have different technology options: near field communication (NFC), code based and cloud based tools. Depending on industry each has its pros and cons, making it hard to choose the right one. It also depends on what do customers prefer – code-based or cloud-based systems? And big investments are needed to install either.

Prospects of M-Payments

What’s positive is that if these concerns can be addressed in nearest future, it could lead to solid growth of m-payment systems. And business owners with the vision for future should look into adopting m-payment systems. Why? Well, m-payments make customers happy. Users say they appreciate faster transactions and the ability to do things without cash.

Customers spend more when they can go mobile.

Also, m-payments offer great customer insights. M-payment services can be especially encouraging for small businesses to track customer behavior, without the need for expensive analytical software or audits.

There’s also a significant progress made by some of the larger companies. Samsung Pay is nice example. Up to 90% of retailers are able to accept it with their terminals. When it first launched in 2015 about 1.5 million transactions were conducted in the first month alone. The system has a secure magnetic transmission technology and the use is simple. Users hold their mobile devices over the terminal to initiate a transaction, and then enter a PIN. Samsung also tackles security concerns with technology of “tokenization”, which transforms card information into a random set of symbols associated with a particular transaction.

by ThinkMobiles
by ThinkMobiles

On the other hand, often the feeling of security is taken out of the m-payment process. Of course, a transaction should be as easy as possible, but some friction is necessary. If customers do not need to enter passwords or PINs, they may feel a bit insecure, because it then seems easy to steal their financial data.

The room for improvement is enormous. According to TechCrunch innovation is expected to come in the following areas. Direct personal payments, where apps likes Venmo, Dwolla and even Facebook Messenger are already leading the way. Virtual banks – probably a point will come when users no longer have to visit a bank.

Crypto-currency is among the most tensely discussed issues in m-payment. Some of online currencies like bitcoin and blockchain are already being supported by big companies. The hope is these crypto-currencies will operate as more secure, transparent and more automatic way of exchanging money and other assets.

Top M-Payment Systems

What m-payment systems do you prefer to use? Are you sure that they are secure enough? Finally, here is the list of 10 m-payment systems you need to be aware of:

  • Google Wallet
  • Apple Pay
  • PayPal
  • Square Cash
  • Stripe
  • Dwolla
  • M-Pesa
  • Venmo
  • Lifelock Wallet
  • Samsung Pay

Similar m-payment solutions development costs starts from $25 K.

How much does a payment app cost?

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