Kelly Scott Madison

Mobile Payments in 2014



Making payments with a mobile device was once thought to be a tech company’s pipe dream, but that dream is now becoming reality.

Mobile-based payments in the U.S. will reach approximately $50 billion in volume by the end of 2014 and mobile pay is expected to reach as high as $142 billion in 2019, which includes all payments made from a mobile device via digital wallets.

Apple Pay, Apple’s newest service offering, is expected to significantly accelerate mobile payments at the register, bringing sales to $34 billion in volume by 2019. Unveiled in September of this year, Apple Pay offers an alternative payment method in an effort to compete against the point-of-sale (POS) payment and aging credit card systems. Apple Pay relies on near field communication (NFC) which enables users to make wireless transactions via their mobile devices from stored debit, credit and gift cards. Advocates claim that NFC payment is just as secure as current plastic credit cards: payments must be approved by the bank provider and authorization comes via one-time payment numbers for purchases, rather than the transmission of credit card numbers and security codes. If your phone is lost or stolen, you must cancel the NFC approval in your SIM card immediately, just as if you had lost a credit card.

So far, these claims have proven to be true. Though extremely new to the space, Apple Pay thus far seems to have avoided any security catastrophes, which is promising after 2014’s various highly-publicized credit card security breaches. In fact, Apple even benefited from rival CurrentC’s admission that its email system was hacked in late October. How long Apple Pay can avoid the same issues remains to be seen, but their proprietary encoding process seems to be an encouraging security standard.

Coming of Age

Mobile commerce, which is the parent term to mobile payment, has actually been around since 1997. Technological advancement over the past four years, however, has increased rapidly. Google Wallet was introduced in 2011 to offer mobile payment utilizing NFC technology in a similar fashion to Apple Pay, but also allows the usage of gift cards and has a different approach to security. The aforementioned CurrentC is the product of a consortium of large U.S. retail companies (called MCX, for Merchant Customer Exchange), and was released in 2012, offering its mobile payment solutions via QR code scanning rather than NFC. Amazon Wallet was also released this year, but has fewer capabilities than Apple Pay and Google wallet. Amazon’s offering requires users to either type in or scan gift and loyalty cards that are then transformed into a digital format, such as a QR code, barcode, text or image.

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