Next week the Summer Olympics will begin in London. I’m a huge sports fan (you should see the pictures lining my office walls!), so I always enjoy watching the world’s most talented athletes go for the gold on the biggest stage of all.
In addition to the athletes showcasing their abilities, something else will be on display at this particular Olympic games: mobile payment. I’ve been talking to you about the game-changing changes in technology, and this is one theme we’re following as smartphones get smarter and are used by more people. So, I thought you would be interested to know a little bit about what will be happening in London.
A group of people, including the 10,500 athletes, will be given a special version of Samsung’s Galaxy S3 smartphone, which was released in May and is selling very well. The Olympic version will come with Visa’s (NYSE:V) mobile payment application (payWave), and about 140,000 “readers” have been installed in businesses and taxis throughout the United Kingdom, so those lucky enough to have one of the phones can pay for things simply by waving it in front of a reader.
Those involved with this effort hope that the payments are processed efficiently and securely. Since the trend toward mobile payments is still in its early stages, consumers want proof that it’s reliable and safe, and the Olympics will be a great place to showcase some of that.
Smartphones Will Replace Cash, Credit
This is really an important trend to watch, as it has been slowly building momentum leading up to the Olympics and could take off after its debut on this global stage. In fact, analysts predict that by the end of this decade, we will use our smartphones more than cash and plastic to pay for things.
The numbers are certainly growing. For example, on Black Friday last year, the number of transactions processed through PayPal Mobile jumped 516% globally. And a recent survey from IDC Financial Insights showed that one in three respondents have used a mobile payment method, with more than half using PayPal Mobile.
You don’t have to venture far to see these results play out in the real world. So-called “digital wallet” apps are starting to gain popularity with smartphone users, who prefer them to cash and credit cards for their convenience and simplicity. Take Starbucks (NASDAQ:SBUX), where customers simply tap an app on their smartphones to pay for coffee. Since launching the app last year, Starbucks has processed more than 45 million digital payments in 9,000 locations.
Another app gaining traction is the Square app, which lets users pay for meals at restaurants via an electronic bill. And then there’s PayDragon, which is great for urbanites who use it to place an order at a food truck and then pick up their meal once it’s ready. No more waiting in lines, no more receipts. The perks of using digital wallet apps are catching speed.
Mobile payment translates to banking as well. Many online banks now offer apps that let customers check their balances, transfer funds between accounts and even deposit checks, all without ever stepping foot inside a bank. JPMorgan (NYSE:JPM) and ING (NYSE:ING) are among the banks that are bringing this technology into the forefront, allowing customers to deposit a check by taking a picture of it with their phone’s camera, and processing the transaction from there.
Competition Is Growing
As I discussed above, Samsung and Visa have snagged the spotlight at this summer’s Olympics with their Galaxy S3 smartphone, but other competitors are jumping into the mobile payment game as well.
Google (NASDAQ:GOOG) has established a presence with its Google Wallet technology, an Android app that stores a virtual version of the user’s Citi MaserCard using PayPass. All the user has to do is tap the phone (“Tap & Go”) at a PayPass acceptance location, which are now in thousands of stores and restaurants around the country, to process a transaction.
PayPal has stepped into the ring as well, recently announcing the acquisition of card.io, a start-up that enables users to use a smartphone camera to scan in their credit card information. This comes as part of PayPal’s effort to branch out from virtual digital exchanges to point-of-sale transactions. Finally, Apple (NASDAQ:AAPL) has been rumored to have mobile technology underway for some time now, recently unveiling patent technology that would incorporate iTunes into mobile payments.
And being summertime, it’ the season when retailers upgrade their technology so they can have everything in place for the all-important holiday shopping season and, ideally, before back-to-school shopping as well. So as you do your back-to-school shopping, you may very well see PayPass technology sprouting up, and notice more stores advertising apps to process transactions.
I’ll be on the lookout as well and will be watching this trend closely has it unfolds. So as the world waits to see who takes home the gold this summer, remember to watch to see if another winner is unveiled as well.