Will payment by phone make credit cards obsolete?22nd March 2013
Whilst payment by smart phone is thought by many people to still be an emerging technology, the software is so developed that most bank account holders will be able to pay by phone within a year.
According to the UK payments council, payment by credit and debit card is set to decline over the next 8 years as we all get on board with payment by phone; little surprise that the companies putting the most into developing the technology and making it safe are the credit card issuers themselves.
Barclays Bank piloted a scheme called “Pingit” last year, which enables consumers to pay other people with their phone. The Orange mobile network launched its offering “Quick Tap” in May 2011 to a luke-warm reception from shoppers.
The UK Payments Council is working on its own, industry wide scheme, which it pledges will cover 90% of bank accounts. It is due to be launched in the early of 2014. Hopefully it will generate competition and up standards in the new technology.
Chief Executive of the UK Payments Council Adrian Kamellard said
“We scarcely notice the steady changes in the way we pay, yet someone in their thirties today will see more change in their lifetime than in the entire history of money.
“Just as we can’t imagine how we ever did without the internet, many people will soon wonder how we used to be so dependent on cash and cheque. Twenty years from now even cards may seem archaic.
“It is easy to imagine a future where we merely pat our pockets for our keys and phone, the wallet and purse could become historical curiosities.”
Just how do we pay for things
In 2001, 43% of our shopping was paid for in notes and change. By 2011, that had fallen to 30%. Most of that is accounted for by very small payments, for less than £5.
But with the decline of cheques being used for over the counter payment in shops when the cheque guarantee scheme was phased out, not everyone thinks the use of cash as the most popular medium will continue to decline.
Ron Delnevo founded Bank Machine, which installed one of the first independent ATMs in the UK in 1998. Mr Delnevo argues that cash still offers the cheapest form of payment for millions of consumers.
Mr Delnevo said
“Cash has been around for 2,500 years. Even in our fast-changing world, it is still the payment method used for 80% of all transactions around the planet.
“Notes circulate with few, if any, administrative overheads.”
The report which indicates the predicted change in the way we pay for things also highlights changes in the items we actually spend money on. It’s no surprise that supermarkets take a greater percentage of our hard earned money than they used to. For every pound we spend on the high street today, 58p goes to a supermarket. That compares to only 46p a decade ago.
The amount of money we spend in cafes, fast food outlets and restaurant has more than doubled since 2001, and we now spend 63% more going to the cinema. There’s no surprise that we now spend more on housing and much more on entertainment.
You can read more in the UK Payments Council’s study on how we spend our money here.
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