For the moment, credit and debit cards are one of the primary ways that consumers purchase items from brick-and-mortar retailers. They're convenient, requiring little more than a swipe in a machine and the quick jot of a signature. In many cases, they're easier to use than cash since there's no need to fumble with change. While their use often entails a small surcharge to the merchant or customer, this has not prevented millions of people from using them every day.
However, the dominance of the credit cards for payments may be waning. Just as mobile devices have replaced cameras and laptops as personal computing devices, they may soon edge in to in-person payments alongside credit cards and debit cards. Smartphone owners already look at their devices 150 times per day on average, so they're an integral part of users' lives.
Issues to be addressed
There are still some issues to overcome with mobile payments, though. Convenience is a major one, since merchants must have NFC readers or an in-store sales system linked to online purchases. PayPal and Apple are already working to overcome this problem by processing in-store payments through blue tooth technology and small readers compatible with retail software, as GigaOM recently highlighted. Google and Apple are also trying to improve the ease of using mobile devices for payments, with Google recently enhancing its mobile wallet with the ability to send payments via email.
However, two other concerns for many users are privacy and security. Google Wallet is tied to a user's email address, and PayPal uses its own online login credentials. Unfortunately, many users of both Google, and Paypal rely solely on usernames and passwords. Passwords are not the most secure method of authentication available, so outsiders may gain access to an account's financial information from the web. This obstacle will need to be overcome by stronger identity management tools. Rather than tying mobile payments to email accounts, the reverse may be necessary to create more confident mobile consumers. Technology that recognizes people by their phone rather than having the right password could be an important step to moving away from credit cards.
The fact that most people carry their smartphones with them nearly everywhere already creates a level of convenience similar to wallets. Like self check-out counters, they may reduce the need for registers by letting customers pay for items as they shop, transmitting payments as they fill their cart or bag. This is more convenient for the consumer, and entails less overhead for retailers who can minimize the number of registers they need to operate.