No Plastic Needed: Consumers and the Future of Mobile Payments

Should Consumers Hop on the Mobile Bandwagon?

Early adopters will be getting in line for Google Wallet and carrier-led rival mobile payment platform Isis. But the average consumer might not be far behind. Its not just convenient and the high-tech cool to “touch-and-go” pay with your phone.

Mobile payments have practical, valuable benefits that may compel everyday consumers to toss their trifold for a mobile wallet.Interaction with your spending — With the average consumer facing $6,285 in credit card debt, according to CreditKarma.com, mobile wallets can take on a sort of “financial conscience” to curb debt and encourage financial responsibility. Interaction with a digital interface, rather than a flat plastic card, opens the door to integrated apps and services for budgeting and real-time account tracking.

For example, MasterCards mobile payment app has built-in money management features such as options to set spending limits and alerts, approve or block purchases in a category, and enable overseas activity. While some credit cards offer activity monitoring online, mobile payments are real-time and preemptive. A spending alert popping up before you make a payment on your phone is harder to ignore than a credit card statement at the end of the month.Integrated shopping opportunities —

To really push adoption, mobile payments cant rely on contactless payments alone. Smartphones cant just be bulkier, digital credit cards. The beauty of mobile payments is its intersection with mobile commerce. Take Google Wallets “integrated experience” that combines deals, location-specific advertising, as well as payments.

Value-added services for both consumers and merchants are the real staying power for mobile payments. For consumers, that means targeted offers and discounts, inventory searches and shopping solutions like hyper-local deals. For merchants, theres potential for customer tracking, purchasing data, and cost-effective advertising. Mobile payments arent just a way to spend your money; it converges ways to save money, track money and shop differently.

Convenience when you shop — As we log hundreds of face-to-screen hours daily and carry cellphones everywhere, mobile payments goes beyond consolidating accessories. Mobile payment platforms remove the physical limitations on where you can pay, how you pay, and to whom. Mobile payments streamline payments, making them faster at checkout through easy payment transfers such as Near Field Communications NFC technology. Across the five main types of mobile payments, the dominant payment trends will be the ones that allow consumers to make the easiest payments wherever they are, which is increasingly not in a physical store or with cash or credit card in hand.

Better security — 1 in 10 U.S. consumers is a victim of identity theft, reports Javelin Strategy & Research. Mobile payments can help stymie these numbers with improved security over traditional credit cards thanks to two-factor authentication, meaning youll need your phone as well as a PIN number in order to complete a transaction. Credit cards have one-factor authentication, in which you only need the card at point of sale, swipe, and the transaction is complete. Security measures for mobile payments will likely improve in leaps and bounds, especially under pressure from regulators and consumer watchdogs. For example, Google Wallet fortified its security measures by storing credit card data on a computer chip in the phones hardware, isolated from the phones hacker-vulnerable operating system software. Plus, smartphones offer apps that remotely lock and erase the phones data in the case of loss. A lost or stolen wallet simply doesnt have the same safeguards as a lost smartphone.

via Justine Rivero: No Plastic Needed: Consumers and the Future of Mobile Payments.