Pay With Your Phone: The New Barter System
Pay with your phone.
One simple sentence. One simple action. So many possibilities.
Growing adoption rates are placing smartphones in more hands across the world, bringing about new connectivity and possibility. On one hand, we are able to connect to others. On the other, we are mainly just connected to our technology. Pick any stat you want. Hours per day. Minutes. Number of times we check our phones. It’s a lot, no matter how you slice it. Researchers have also found that most usage is only in short bursts, noting levels of habitual behavior. We’re addicted, for better or worse. For the better, phones have created a great deal of functionality to make things easier and faster.
Our phones have become our livelihood, linking us to friends and family, managing our calendars and bank accounts, and now being used at tremendous growth rates for payments.
Brief Overview on the Evolution of Payments
There was a time I might trade you my chicken eggs for your corn.
This rudimentary transaction was known as the barter system, which dates back as far as recorded history. Essentially, it involves the exchanging of agreed upon goods or services. We all do this on some level nearly everyday. We trade our side of fries for our friend’s cookie. Children trade eating broccoli for time spent playing video games. Photographers may offer free sessions to a web developer in exchange for online design services. Used in passing now, it was the predominant means of “buying” things. Barter systems eventually gave way to currency.
The first official minted coin dates back to 600 B.C. when Lydia’s King Alyattes created denominations of currency made from a mixture of silver and gold. Payments then shifted to a combination of coins and paper, first used as ‘IOUs’ by colonial governments in North America.
Let’s skip a couple of centuries to the mid 1900s, when the first credit card was appeared. Developed by Frank McNamara in the form of the Diner’s Club, the idea was born to “buy now, pay later.” Soon after, mega debit and credit giants Visa and MasterCard were formed. Credit and debit cards have certainly seen their rise in usage, making the payment process more accessible for thousands of card carriers.
Today, the ability to pay with your phone is rising. Coffee, pizza, gift boxes, and mobile tickets can all be purchased with your phone. Mobile commerce is growing fast, even outpacing the growth of mobile phones and the networks that carry them. The total mobile commerce market is expected to hit $850 billion by 2018, with consumer app revenue reaching $75 billion by the same year. With so many payment companies and mobile apps, the simple ability to offer payments is no longer unique or competitive.
We have to move beyond just payments, and think how we can deliver experiences to customers who trust us with a direct line to their money.
It’s All in the Experience
Payments are a great start. They’re functional. They help you get things like concert tickets or clothes. In a lot of ways, payments are a primary service that make it easy to move money from one place to another. But today, companies are moving beyond just payments and creating experiences. Payments may be the central component, but in order to compete for increasingly distracted consumer attention, you have to create an immersive platform.
The Miami Heat created a ‘fan experience’ application that went beyond the ability to just buy basketball game tickets. The app caters the experience based on what preferences the fan selects. If you crave all the gritty details of the game, you can see lots of stats. If you prefer just a light overview, the app will deliver that, too.
[ Miami Heat ‘fan experience‘ ]
The app also serves as your ticket into the game (if purchased of course) and allows you to make purchases throughout the venue with a mobile wallet. Fans can earn rewards based on how many transactions they make through the wallet, gamifying the experience. If you get lost or can’t find your favorite concession stand, don’t worry, the app will help guide you. Finally, the app also offers VIP content for those wanting a more exclusive look into their team.
The Smartphone Has Changed Everything
By everything, we mean everything.
“It’s the comfort of having everything in your phone. I used to always carry a camera because I love taking pictures. But with my phone, I don’t need my camera anymore. If I can just pay with my phone, why carry a wallet? It makes everything so easy,” said Amelia Chung, Office Manager at Passport.
Mobile usage is on the rise for more than just pictures. Minutes spent on mobile are on the rise and particularly with apps instead of browsers. In fact, nearly 90% of time spent on a smartphone is “in-app”. Social apps, like Instagram, Snapchat, and WeChat continue to consume our time while navigation apps from Apple, Google, and crowdsourcing phenom Waze also draw significant usage. It’s clear. We’ve replaced postcards, landline phones, and maps with smartphones and apps.
Smartphones are more than just convenience and social apps. For some, it’s vital. According to Pew Research, 10% of Americans rely on their smartphone for direct access to the internet because they do not have broadband at home. 15% of Americans say they have limited options in connecting to the internet and 7% rely heavily on their smartphone to stay connected.
Once used for just making calls, phones have become the dominant device in our lives. Messaging, videos, pictures, bank accounts, entertainment, and the ability to buy goods and services–all from one place–has made the smartphone an essential possession for so many. The future of mobile will continue to offer more connected experiences than we ever thought possible and companies that work to create a unique and customized platform for users will have an advantage over competitors for attention and usage.
Whether for leisure of livelihood, the smartphone has forever changed the landscape of connectivity.