There is no argument against the fact that smartphones have tremendously enhanced our lives as they deliver functions today that in the past we needed a separate device for. This includes the likes of a GPS, music players, the now extremely precious photo camera and more. If only our smartphones could now employ the same magic regarding our plastic credit cards that we are currently forced to carry with us in a wallet.
Good news is found in payments becoming more and more digitized as the trend of physical stores making such services available for their customers through smartphones has not only started but is gaining momentum at an extremely fast rate as we speak.
This entire phenomenon was first embarked back in 2011 when Starbucks launched its mobile app, and Apple Pay followed suit in 2014. From then on a significant number of banks, digital players and retailers have initiated or are in the preparation phase of their platforms offering digital payment. All those involved are placing very serious efforts to enhance and evolve the services they provide, all to render the highest possible facility for their customers.
Taking a look at the music industry’s digitization provides us some insight on anticipating how such digital payment services may actually develop. Considering the fact that music launched its digitization many years ago, there are a number of very important lessons and insights we can extract in this regard.
The music industry began by offering digital downloading into various players, carried out by hardware dedicated for this specific cause–such as the iPod–or software programs that usually run on PCs. The convenience provided immediately by downloads were great. All our entire music libraries were suddenly found in our pocket, a list of our purchases were available instantly and …
Coinciding with this major trend, many digital music services at first step limited download services regarding certain file formats to specific players. Their access to catalogs were also limited. Time was needed to resolve these matters. A few years down the road we witnessed the birth of music streaming, only to vanish very quickly. Platforms providing these services, such as Pandora and Spotify, jumped from 5% of their total online music sales in 2009 to a whopping 27% in five years’ time. As the concept inherited from physical records enhanced considerably at the hands of digital download services (including stores, players, and the permanent purchases seen in relation to singles and albums), streaming took even one step further and began to fully exploit digital medium possibilities. Through this transition that took a decade to complete, the dominant format of music today has become digital, leading to a major drop in sales of CD albums.
Today, digital payment services are very effectively embarking on a journey that will most probably take years to complete. Already providing high convenience, these current services are improving considerably and such a trend is most likely to continue and expand.
Similar to the one-click method used in music streaming, with digital payment the consumer will be able to request and apply for a new card right in the app, and the card then arrives digitally straight into the app. The consumer can also instantly receive a credit limit extension on their existing card to their purchases.
As we saw music services expand into other fields of work, including video or the purchase of concert tickets, digital payment services will most definitely begin covering different types of transaction that consumers carry out in physical stores. Digitally redeeming coupons, offers, rewards, gift cards or even earning loyalty credit, while also paying at the same time. It will be quite interactive to see all these services provided in smartphones, rendering a very integrated experience for us users.
Entirely new lines of services will be made possible, including “order ahead” where consumers issue requests using their phones and collection is made possible only a few minutes later. Innovative consumer experience are in the distant horizon with digital marketing.
With digital music services providing special personalization by showing suggestions that are calculated by sophisticated algorithms, it is high time for such trends to be replicated in digital payments. Apps involved in this regard would be the best platform to provide personalized offers and/or recommendations at the best time possible; for example, when the consumer has entered the physical store.
The mobile device of a consumer will play a key role in these different scenarios. The interactions of digital payments will be focused primarily on mobile user interface. This rich interface will be at the leverage of service providers, including the location, user and contextual awareness, all to provide a level of service that can easily be described as impossible through traditional credit cards.
Of course, we are also living in a world where we hear more and more often about how our own governments and major tech companies are mass gathering data about our daily lives and habits, for “the better good” of our security and to gain the utmost profit by providing the best type of service and products to each and every customer. Furthermore, there are also troubling news about hackers becoming more powerful than ever before and disrupting our daily lives by stealing large chunks of data that can include a breach of our personal privacy. This threat is growing as we welcome more than ever before artificial intelligence and the Internet of Things into our lives. If we intend to place very sensitive credit card information in our smartphones, then there definitely needs to be a guaranteed and secure method to protect this vital information from those intending to do harm, or simply gather our personal information without our consent.
Obviously, digital payment has a very bright future ahead of it. Smartphones have once again stepped up to the plate to make our lives better and easier. Despite the legitimate concerns, many are very eager.