Mobile Payments Then and Now

Payment processor, notes the evolution of mobile payments in their latest Evolution of Mobile Payments inforgraphic. Currently, about 40% of North Americans have used some form of mobile payment. On the global scale, Asia has over 100 million mobile payment users and Africa makes up 52% of the world’s mobile money transactions. It is projected that in 2016, there will be approximately 447.9 million mobile payment users worldwide.

The quick evolution of the mobile payment industry has many in the mobile and traditional banking industries paying close attention to the technologies and mobile payment processes that consumers embrace. Perhaps the key to knowing which payment processes will grab the attention and loyalty of the future consumer, is to look to the success of popular payments processes of the past.

One of humanity’s earliest form of payment was mobile (livestock). As livestock eventually became a bit burdensome to exchange, coins became a popular type of payment in 700 BC. In 960 AD, China started using paper money to purchase goods. In 1921 the first charge cards were given to loyal Western Union customers, but the next major shift in mobile payments since coin came in 1958 when the Bank Americard (Visa) became the first credit card issued by a third-party bank. In the 1980’s, a financial shift in America made large lines of credit attainable to almost anyone which caused a plastic explosion. As a result, credit and debit cards became the most prominent forms of mobile payment.

In 1997, the concept of mobile phones being used to make purchases was introduced by Coke, which asked customers to send a text to select vending machines to buy drinks. In less than 20 years, this concept has evolved and branched off into six main mobile payments: In-App payments, mobile point of sale, online payment services, mobile p2p transfers, Bluetooth low energy, and near field communication.

In-App payments are payments that are made within a consumer’s smartphone to purchase goods. Mobile points of sale basically turn smartphones into credit card machines that enable businesses to accept plastic. In online payment services, consumers shop for goods online, and their account information is stored in a PCI-compliant environment when they purchase items from retailers. Peer-to-peer payment apps allows individuals to send money to each other’s bank accounts using smartphones. BLE beacons are made to connect to Bluetooth enabled smartphones that send offers to consumers. NFC transfers small amounts of data between retail terminals and smartphones.

The next step for mobile payments is anyone’s guess. But what has become apparent is that consumers do want to pay for products with their mobile devices, and are willing to endure minor security or privacy invasions for the convenience of paying on the go. Will extreme comfort and convenient mobile payment processing continue to drive payment processing evolution? The history of mobile payments seems to suggest this may be only the beginning.


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