The future of payments is hard for anyone to predict, but with the payments landscape changing, what could the future hold?
In the â€˜50s and â€˜60s plastic credit cards quickly replaced paper money as the major payment method and now it seems that we'll be staring down the barrel of a completely digital money world soon enough.
A world where coins are nothing more than foil wrapped chocolate you give to children during the holidays and paper money is naught but a myth.
At least that's how I see a future of money forming amongst the consumer, and I think this because of the rapid pace at which payment models have taken off in the last decade.
If they continue on at such a pace, where could we end up?
Below are three of the key factors that I think will dictate the change modern payment methods.
1. Consumer Choice
It's already happening as we speak, but consumers are becoming more empowered by the day. Because of this, payment models have started to bend to their whim, letting them dictate how and when they want to pay.
In the future this means that payments will need to be available to be made absolutely everywhere at any time and any place. This also means that banking will happen 24 hours a day, 7 days a week, as consumers don't want to be restricted by such trivialities.
2. The Decline of Bricks and Mortar Banks
This may be a highly controversial point, but more and more people are shying away from going to physical banks – instead preferring to use online or mobile banking instead due to the flexibility it offers and the speediness of making payments and amending details. It's fast, accessible and easy – why wouldn't you do it?
If this trend continues to grow in the direction it seems to be, the future will be a place with far fewer brick and mortar banks for consumers to stroll in from off the street. There will still be banks – after all there has to be for anyone to be exchanging money – but their physical high-street presence will be diminished as the need to visit such places to conduct the more advanced interactions can be carried out online or over the phone.
In their current guise, many banks make online and mobile a rather tasking procedure of memorising numbers and codes in the name of security. Once that's been streamlined, there's very little – besides human interaction – that could tempt someone to sorting out a problem in store.
3. The Mobile Phone Market
While technology such as NFC has been around for a little while now in cards and payment devices, it's still very much in its infancy. The major deciding factor for its future comes from what the mobile phone market are doing.
Visa's partnership with Samsung for the Galaxy S4 shows just how important card companies see the modern mobile phone. The incredible uptake of mobile banking in low-income countries with high levels of the unbanked also show just how impressively powerful the mobile phone market is in dictating how consumers handle their finances.
In the future, payment methods will be dictated by the technologies phone manufactures decide to include and the usability they decide to implement. In the West, mobile banking really only took off on the advent of the smartphone where it became incredibly accessible – while in the East and Africa it's been a much more prevalent method of payment, so it could really sway either way.
What three factors do you think will dictate how the payments market will change in the future?
Could you see us ever living in a cashless society?
Share your thoughts on the matter in the comment box below.
This is my own view of what the future could hold, however at Cards & Payments Asia 2013, Balatro Ltd's Chief Executive Chris Skinner will be hosting a talk all about the evolution of payments and what the bank of 2021 could well end up looking like. Book now to find out what this payments guru knows all about.