Mobile payments: will smartphones replace purses?

The expert: Juliette Villeminot is director of shopper research at GFK Consumer Experiences. With over 15 years’ experience in market research, she works on defining and implementing brand distribution strategy and point-of-sale activation.

Why are mobile payments useful?
Juliette Villeminot: Being able to use your smartphone to pay small amounts without using cash is one of the main advantages of this technology. It’s more practical for users, who don’t have to worry about carrying around cash, and it’s faster than using card, because the transaction takes place in a few seconds without entering a PIN. It can also save time in certain situations when there are long queues due to customers wanting to pay using various methods: as debit card requires a PIN and a printed receipt, and paying in cash often means waiting for change, etc. But the problem is that right now in France, despite several services already being in operation, consumers are not well-enough informed about the benefits of mobile payments.
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Apple has just recently ventured into mobile payments by putting an NFC chip in the new iPhone 6 and has also launched its secure mobile payment platform Apple Pay. Currently only available in the US, it will also be compatible with the Apple Watch. © Apple
Can you buy anything with your smartphone?
220,000 businesses in France are set up for contactless payments, with either a smartphone or a debit card. Additionally, there are many mobile apps that let you pay for goods or services directly from your device. I’m thinking in particular of PayByPhone, a free app that lets you pay for parking tickets remotely, without needing to return to your vehicle. It works in over 300 cities. There are thresholds for mobile payments. Amounts below 20 euros can be paid without entering your PIN. For anything above that amount, up to the limit of 300 euros, users must enter their PIN.
NFC TechnologyNFC (Near Field Communication)is a telecommunications technique that uses very short-range radio (less than 10 centimetres) to transfer data between two compatible devices: file-sharing between a smartphone and a computer, secure entrance into buildings, reading electronic labels, etc. But the most significant development for this technology concerns mobile payments. More and more smartphones and connected objects have an NFC chip, which can potentially replace our wallets and debit cards to pay for purchases. With a secure payment app, customers just need to hold their smartphone near an NFC-compatible reader to pay for a loaf of bread, a bus ticket, a movie, etc.

Your research shows that french consumers are interested, but also hesitant. Why is this?
Security is definitely the most significant barrier. 60% of the people we interviewed are worried about their personal data. This tendency is especially high in young people. So a powerful brand like Apple getting involved in mobile payments will almost certainly move things in the right direction. Apple’s choice of NFC contactless technology and a fingerprint reader to make transactions secure will help to clarify the concept for users. But the stakeholders (businesses, service providers, banks and manufacturers) still have a lot of work to do educating people about the day-to-day benefits of this solution, which will end up becoming widely accepted.

Payment using a mobile reader is perhaps only the first step toward a completely virtual system where our bodies will approve transactions. In Sweden, a student at Lund University has invented Quixter, a payment system that lets users pay for purchases using the palm of their hand. The device uses infrared light to read the venous network of the hand, which is unique to each person. © Quixter
Is this movement towards mobile payments the beginning of a larger shift that could lead to the disappearance of cash?Ultimately, this will happen. Digital currency is the future. Yet it’s hard to say when it will happen. One of the long-term trends is biometric systems that recognize physical characteristics. Take the recent example of Quixter, which scans the venous network on the palm of the hand as a verification method for payment. One day, perhaps we won’t even need a device to make a payment – we’ll just use our bodies.To go further
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