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What's next for mobile payments?

A few years back, experts predicted that the smartphone would replace the wallet by now. The trouble is, most of these predictions were way too optimistic.

by / November 29, 2013

Google Wallet

Google Wallet: Flickr/Justin Pickard


Many American are braving the crowds this Thanksgiving weekend - trying to avoid (or ignore) the masses as they shop for holiday deals.

Or perhaps you’re sitting quietly at home next to a nice warm fire while shopping online with coupons for free shipping and more. Either way, you have probably used one or more traditional credit or debit cards in the checkout process.

But according to many experts a few years back, it wasn’t supposed to be this way in late 2013.

In fact, experts predicted that the smartphone would replace the wallet. The charts and trends listed are impressive. The trouble is, many of these predictions missed the mark.

From the Google Wallet to Microsoft’s Passport, mobile payments continue to evolve and struggle to gain widespread appeal and adoption.

Keep pulling out your plastic

According to a study last year, the average American has 3.5 credit cards.

A few years back, there were predictions that new mobile payments using smartphones and Near Field Communication (NFC) would replace paying with cash or the need for our traditional plastic forms of credit payment.

For example: “This post is about emerging technology that I see making inroads in education, training, and informal learning by the end of 2012—Near Field Communication (NFC).”

Even predictions from last year described a near-term surge in mobile payments with NFC.

But mobile payment adoption has been slowed by a number of factors - the major reason being a lack of standards for in-store end-point devices:

…A huge number of companies are involved in turning smartphones into credit card killers.… In fact, many of these players are carving out standards and alliances that prevent any mobile payments system from being usable by all consumers at all stores.

 …So if you embrace a mobile payments solution and try to pay with things with your phone, most stores won't accept it.

For consumers, the whole mobile payments scene is a confusing mess. So they're sticking with credit cards. And that's why credit cards and credit-card like devices are experiencing a renaissance.

The new, improved credit card?

So where to next? The old adage, “If you can’t beat them, join them,” may apply.

Coin, a recent startup company from California, believes that they have a secure answer.  This article describes how Coin works:

It has only been two weeks since Coin, a startup that aims to become your credit card-sized digital wallet, hit its initial pre-sale goal. The Coin card is designed to replace credit, bank, gift, and loyalty cards by letting users scan them into a single device that syncs with a smartphone. As a Coin user, you have the ability to scan-in all of your cards, and then flip through them with a single button.

While this new innovation seems intriguing, will the credit card companies support this approach or try and torpedo this new all-in-one holder of credit cards?

What are the problems with Coin? “If major credit cards see Coin as a liability or ripe for fraud -- after all, the actual issued card isn't being presented -- Coin would be sunk.”

I suspect the credit card “big guns” like Visa and Mastercard will try and throw water on the Coin fire – at least initially. Later, they will probably cut a deal.

New predictions on mobile payments

So what’s next for mobile payments as we head into 2014?

According to this report from back in 2012, don’t give up on smartphones just yet. The Pew Research Center’s Internet and American Life Project claims that smartphones will replace cash and credit cards by 2020 for most of us. Here’s an excerpt:

“By 2020, most people will have embraced and fully adopted the use of smart-device swiping for purchases they make, nearly eliminating the need for cash or credit cards. People will come to trust and rely on personal hardware and software for handling monetary transactions over the Internet and in stores. Cash and credit cards will have mostly disappeared from many of the transactions that occur in advanced countries,” the survey statement said.

And while over half of smartphones users make mobile payments, these surveys “cheat” (in my opinion) by including any payment conducted with a smartphone – even using a credit card or PayPal. This is too wide of a definition in my view.

Keep security in mind

One thing is for sure… security remains the top consumer concern, regardless of what process or technology is used for mobile payments. The survey reports, “More than three-quarters of respondents (77.7%) listed security as their most serious concern.”

What’s the moral of the story? I think Bill Gates was right when he said, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.”

Especially when is comes to your wallet.

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Dan Lohrmann Chief Security Officer & Chief Strategist at Security Mentor Inc.

Daniel J. Lohrmann is an internationally recognized cybersecurity leader, technologist, keynote speaker and author.

During his distinguished career, he has served global organizations in the public and private sectors in a variety of executive leadership capacities, receiving numerous national awards including: CSO of the Year, Public Official of the Year and Computerworld Premier 100 IT Leader.
Lohrmann led Michigan government’s cybersecurity and technology infrastructure teams from May 2002 to August 2014, including enterprisewide Chief Security Officer (CSO), Chief Technology Officer (CTO) and Chief Information Security Officer (CISO) roles in Michigan.

He currently serves as the Chief Security Officer (CSO) and Chief Strategist for Security Mentor Inc. He is leading the development and implementation of Security Mentor’s industry-leading cyber training, consulting and workshops for end users, managers and executives in the public and private sectors. He has advised senior leaders at the White House, National Governors Association (NGA), National Association of State CIOs (NASCIO), U.S. Department of Homeland Security (DHS), federal, state and local government agencies, Fortune 500 companies, small businesses and nonprofit institutions.

He has more than 30 years of experience in the computer industry, beginning his career with the National Security Agency. He worked for three years in England as a senior network engineer for Lockheed Martin (formerly Loral Aerospace) and for four years as a technical director for ManTech International in a US/UK military facility.

Lohrmann is the author of two books: Virtual Integrity: Faithfully Navigating the Brave New Web and BYOD for You: The Guide to Bring Your Own Device to Work. He has been a keynote speaker at global security and technology conferences from South Africa to Dubai and from Washington, D.C., to Moscow.

He holds a master's degree in computer science (CS) from Johns Hopkins University in Baltimore, and a bachelor's degree in CS from Valparaiso University in Indiana.

Follow Lohrmann on Twitter at: @govcso

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