There’s a growing swell of movement around utilizing the cell phone to make payments. Some employ NFC (near-field communication) while others employ other cell-based mechanisms (most recently Payfone). But regardless of the method, the objective is clear:
Mobile payments let you pay for stuff like digital and hard goods using just your phone number. That means you can buy things even if you don’t have a credit card. And even if you do have a credit card, you don’t have to enter the 16-digit account number, your name and billing address every single time you want to make a transaction.
Although the above is directly from the Payfone website, it pretty much sums up the core objective which is to enable you to make physical or digital payments by just using your mobile phone. Authentication, credit card number storage/encryption, processing, and everything in between are handled by the payment platform. And although there has been a lot of news around this recently, it’s been happening around the world (most prevalently in Japan) for years.
Still, the question that remains is: why? What problem does this solve that makes everyone so keen to turn the mobile phone into a payment tool?
To be honest, I don’t know the answer to that. There is the question of convenience. Why should I need to carry around my wallet if my phone is capable of making the same payment my credit card (or cash) does? It’s just one less thing to worry about. The problem there is that payment methods using credit cards and cash are ingrained into the very fabric of U.S. consumerism. In fact, having a wallet or a purse (with the capacity to hold money and cards thereby enabling them as a consumer) is a “right of passage” for many young kids. How many times have you seen kids playing pretend store exchanging plastic cards and Monopoly money? How many times have you seen a kid saying, “can I pay this with my phone?”
So let’s put aside the issue of convenience for a second as this does provide a more convenient payment system if I can ultimately funnel all of my transactions into a single gateway. There is a fundamental issue of security that must be addressed. Although some would argue that consumers are more understanding of electronic payments and the inherent security of electronic commerce (call it a suspension of disbelief), recent high-profile data thefts involving credit cards has shed light on the undeniable truth of electronic transactions: no data is safe. And now we are talking about linking my cell phone to my credit cards to my bank account? How many more components do we want to add to the system (which inherently increases the opportunity for security breach)?
I think that using a cell phone for payment is an evolutionary change to commercialism within modern culture. The tangible nature of cash and credit cards are comforting psychologically to many people. I think it would be interesting to see a study on how long it took people to adopt debit cards over using cash/checks as there is some analogy there to using the phone as a payment source. Will it happen? Will our kids use cell phones to pay for everything? Definitely not overnight and definitely not in the next ten, twenty, or even thirty years. This is such a fundamental, psychological transformation that it will take decades for commercialism to transform into something completely digital.
Image courtesy of laughingsquid.com.
Originally posted 2011-08-01 14:39:12.