The future of mobile payments

Magnetic stripes on cards were developed in the late 1960s. The technological breakthrough helped convert “raised letter” credit cards from single-purpose tools to universal cards accepted by a wide variety of places. Even more importantly, the development of the magnetic stripe cleared the way for fast, nearly instantaneous computerized transactions. As a result, every credit or debit card has the same format of information in the same place with only slight variations in color and branding based on the issuer.

Today, credit, debit and charge cards are the instrument and interface of many transactions around the world. The design and utility crosses cultures, languages and requires no explanation. Retail and banking systems know precisely how to handle and capture credit card data due to the uniform nature of the instrument. This is not the case in the mobile payments space.

Efforts to integrate the credit card and the mobile device have resulted in strangely branded, fragmented retail and hardware specific versions of the original “raised letter” cards that only function within the context and design of the issuer. Some even require new point of sale hardware. There is an overall lack of uniformity in design and function. As a result, the adoption of a mobile device- based payment instrument has not rivaled the credit card in adoption or use.

Let’s stop trying to put credit cards on devices and turn our devices into true transaction tools.

The context to consider when attempting to realize a future with ubiquitous adoption of mobile device based transactions begins with an assessment and observation of social practices and how our daily lives or culture are being impacted by technology. There are two key points here:

Mobile devices have become a universally owned and controlled instrument, similar in that respect to a credit card.
There already exists an enormous infrastructure of retail point of sale, banking ATMs and financial systems designed to manage card data. How does a technology company take these two points and leverage them in a way to truly pave the way for universal mobile device based payments?

If we are to learn from history, the answer lies in creating a uniform digital transaction interface within the various mobile apps that easily interacts with existing point of sale systems and is as easy to use as a credit card with the added benefit of turning the mobile device into an authorization token.

Similar to the innovation of the magnetic stripe paving the way for rapid, mass adoption of credit cards, an efficient and uniform mobile transaction interface is the key to ubiquity in the mobile payment space and the future of real time transactions.

A uniform interface design must leverage the familiarity of mobile devices and efficiently facilitate the communication of the data required in a transaction. Add the authorization capability of mobile devices and the result is a more secure, easy to use world of mobile enabled digital transactions. The interface should be precisely the same across every flavor of mobile payment provider. This is especially significant in a world where we are moving toward real time payments between financial institutions and individual accounts.

The final component in the recipe of the true future of payments and transactions is a powerful and easily recognized name that requires no explanation similar to the way that the words credit card or debit card require no explanation. We cannot believe that a newly construed phrase is going to capture the attention of the world the way that say “Google” has established a new word associated with looking for information. Payments is not a new category and the payments space needs to build upon what is already socially and culturally accepted and in use. Until these things occur, the mobile payment space will continue to struggle to gain mass adoption.

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