9 Emerging Payment Systems – Set For Massive Disruption in 2017
Who would have thought there would ever come a time when credit cards face sure extinction. Since credit and debit cards overtook cash as the main form of payment, they have utterly dominated the market from grocery stores to hospitals and even online. But change is inevitable and the payments industry is set for massive disruption as a slew of emerging payment systems innovations fight for recognition.
Mobile payment platforms, with Apple Pay being the most notable, have led the way in pushing plastic and cash out of people’s wallets. Other emerging payment technologies are more on the side of weird while others are quite futuristic. Here is a rundown of emerging payment systems and platforms that will take over your wallet soon, if they have not already.
1. Exploding Growth of NFC Payment Systems
Apple Pay, Android Pay, Samsung Pay; all these competing payment systems rely on NFC technology to work. NFC, referred in full as Near-Field Communication, allows you to pay wirelessly using your device. For it to work, your smartphone must be embedded with an NFC chip. Likewise the checkout reader at the store must be NFC-enabled.
NFC-based mobile payments are not a new thing, having been around for quite some time. But their pace of growth and the rate at which they continue to eclipse cash and physical cards puts them first on our list. Stores have been slow to adopt NFC payments, primarily because of the cost of acquiring new hardware. But more and more places are getting the right type of hardware and accepting NFC payments.
It is important to note that Samsung Pay has a bonus capability in addition to NFC. It has MST or magnetic secure transmission. This allows the use of Samsung pay with traditional credit card readers. This could give Samsung Pay an edge over its competition since stores already have the requisite equipment.
NFC technology will continue to drive wireless payments for the next several years. It will get better, faster and more secure. It will be affixed on more devices, increasing the number of ways you can pay for your coffee and groceries. Eventually, plastic cards will follow physical cash into extinction and mobile payments will become the new standard.
2. Paying using wearables
Once tech companies got the hang of contactless payments, it was only a matter of time before that technology got transferred to wearables. Smartwatches have led the way in adopting NFC-based payments though some still depend on you having your smartphone with you to complete the payment.
In the future, as wearables get more independent, you do not have to carry your smartphone around to make payments.
More importantly, payment technologies will move beyond smartwatches. NFC technology can be affixed on anything wearable including clothes, finger rings, jewelry, fitness bands and any other wearable you can think of.
The biggest advantage of this expansion will be convenience. Right now, having your smartphone with you is necessary to enjoy contactless payments. With wearables, you can access your money from your Smartwatch, glasses, necklace or anything else NFC-enabled you have on you.
We might even get small wearables, such as clip-ons dedicated only to NFC payments.
3. Paying with your hand
File this under weird technologies that will soon become norm. Science says the network of veins in the palm of your hand is as unique as your fingerprint. This makes it possible to use it as a secure identification method.
The technology works by linking up each customer’s vein pattern with their bank information. So when you walk up to a register in a coffee shop, placing your palm on the scanner is enough to trigger a payment.
Note that nothing is implanted on your skin. The scanner simply uses your veining pattern to make a payment. This makes for faster, easier and more convenient payments at grocery stores.
Some of the startups leading in this payment technology include Sweden-based Quixter and US-based Biyo. The technology itself has been around for quite a while, appearing as far back as 2014. In Japan it has been in use for years to speed up ATM transactions.
But as a payment method, it is yet to enjoy mass market adoption. But that could change as disruption of traditional payment methods continues. People have an increased appetite for novel technologies that carry ease and convenience with them and vein-based payment fits this description.
4. Implantable chips for payment
In the near future, you might not even need to carry anything with you to make a payment; it will be all inside you. Implantable chips could potentially be used as a form of payment. Currently, the biggest use of implanted chips is in animals. Dogs are often implanted with RFID chips to enable identification when they get lost.
In humans, we mostly talk about implantable chips when it comes to remote health monitoring. They will be used to monitor things like body temperature, heart beat and blood sugar and then send that information to your doctor. Using an implanted chip to pay for your dinner is a relatively new idea.
Tiny RFID or even NFC-based chips will be inserted under the skin. When you need to make a payment, you will simply hold up your hand to a reader and your payment is processed. The technology is still very nascent and filled with kinks as this on Buzzfeed story shows. Like any other technology, it will take time to be ironed out and made ready for wider adoption.
The biggest challenge will be convincing people to accept to be injected with an implant to make paying for groceries easier. Here, methods like mobile payments and the aforementioned vein-based payments could win out.
5. Biometric authentications
We have already talked about hand-based payments. While this sounds revolutionary, it is simply one of many biometric authentication methods. Science has discovered that humans have several unique identifying characteristics such as your voice, your iris, your vein formation and so on.
Technology can rely on these characteristics to confirm an individual’s identity in what is known as biometric authentication.
A good example of this technology is in modern smartphones. Many now come with fingerprint scanners that are used to unlock the phone and make mobile payments. Others scan your retina or iris for identification.
Biometric authentication methods are increasingly being used to make payments easier and more secure. Instead of having to carry your cards or cash, you can use your voice, face, eyes, hand, fingerprint or even your earlobe to make a payment. Of course different methods have varying levels of security.
For example, voice recognition systems are notoriously easy to manipulate especially on smartphones while veins and facial recognition would be a bit harder to beat.
6. Digital currencies
For a time, Bitcoin was the talk of the town. This new currency was all anybody could talk about. The new coinage has since taken a dive as various scandals and upheavals have embroiled its production, regulation and use.
Bitcoin is not the only new currency to garner interest. Others include Litecoin, Ethereum, Ripple and Dogecoin (source). Bitcoin gained particular interest in how quickly the market adopted it. It went as far as being adopted by some major businesses such as Subway, WordPress and Zynga.
Collectively, these currencies are called crypto-currencies or simply digital currencies. They rely on a network of computer systems to be produced (or mined) and distributed. While the fervor for digital currencies has cooled down considerably in recent times, there is no doubting that they could become a major form of payment in the future.
The biggest challenge for these currencies is gaining enough trust among individuals and businesses. Government regulations also stand as a major obstacle with most countries expressing resistance to the emergence of digital currencies. But a future where Bitcoin rules our markets and transaction is not so imaginary anymore.
To understand more about crypto-currencies and their role in your financial future, read this comprehensive guide.
7. Pay by text or Tweet
Paying by text message is not exactly a new technology. It deserves a spot on our list for the rapid way it is growing and overtaking traditional payment platforms.
Paying by text works fairly the same way as paying by email. You simply use a phone number to identify the recipient of the money, whole your phone number identifies you as the sender. It is fast, simple and often secure. Some of the leading startups in this field are Payment Savvy and allpay.
A more innovative payment method involves paying by tweeting. The platform is most popular in France where banking giant, BPCE allows anyone with a Twitter account and linked credit card to pay with a tweet. To make a payment, you tweet out an exact arrangement of words and phrases for the cash to go through.
Since the tweets are public, charities and organizations doing public fundraising will benefit most from this technology. With time this payment method could become widespread especially for people making contributions to charities. Those confident enough can also opt to pay their utility bills via tweets.
Even if it does not gain wide market adoption, it is still a fascinating window into where payment technology is headed. In that future, even plastic cards are huge inconveniences that will not survive the barrage of new and exciting payment methods.
8. Let your AI do everything
We could not complete this list without giving a mention to artificial intelligence. Whatever field of emerging technology you discuss, you are bound to find AI in the midst of it, driving innovation and promising a fascinating future. When it comes to the future of payment, AI is a big part of it.
Remember that emerging and future payment technology relies a lot on convenience and ease of use. These two descriptions perfectly fit AI. By understanding users and their habits, artificial intelligence programs make tasks easier.
In the future, a personal AI program could handle a bulk of your payments on your behalf securely and without making a mistake as humans are prone to do. For example it could handle recurring payments such as subscriptions and utilities.
With your financial information, it will be able to craft an efficient budget for you, recommending how much you should spend in various areas. It might go a step further and your monthly shopping on Amazon and make the necessary payment. It could even file your taxes for you.
For large businesses, AI could help in handling and processing the thousands of payments coming in from customers. Banks will also get a big boost from AI as they try to sort through transactions and facilitate customer payments.
9. Payment via augmented reality (AR)
Finally, there is augmented reality. Since Google Glass died, a host of new augmented reality devices have cropped up and they represent a feasible payment platform. One obvious solution is to load these devices with NFC technology. Once in proximity to an NFC-enabled reader, you can then use your AR glasses to make a quick payment.
But AR payments go beyond glasses. Visa, for example, launched an innovative AR payment method in Europe. In collaboration with the fashion brand House of Holland, users can buy clothes without having to chuck a credit card or use cash. By holding your phone up to the cloth item, an app recognizes it and allows you to make an instant purchase using your phone.
PayPal has been granted a patent for a new AR-based payment system. Using an AR headset, users can look at a real-life object and get more information about it including usage instructions, product description and customer reviews. The platform would also allow users to make a purchase from one of various sellers and instantly pay for it via PayPal. All this is done without lifting your phone or using your credit card.
Emerging Payment Systems – The Future Goes Wireless
It is obvious that the future of payment is going to be wireless. All that cash and plastic filling our wallets today is going to be extinct. Instead, gadgets like your smartphone, Smartwatch and glasses will be the new digital wallets.
Which future payment technology excites you most? Do you think cards and cash will completely disappear? Leave your comments below.
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