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May 2016

Mobile payment has been touted as the next big thing, but does it have the best safeguards against hackers?

That mobile payments have become an integral part of the way we make payments is no longer a surprise. According to Statista, the volume of mobile payments are expected to see a CAGR of nearly 25% over the next 4 years going past the $1 tn level by 2019.

market-rewaind-chart1While the emergence and growth of the smartphone over the last few years has been driving this phenomenon and is expected to forefront this growth, the origins can be traced back to the humble origin of the mobile phone. 1997 saw Coca Cola introduce a small number of vending machines in Helsinki allowing customers to purchase their drink via an SMS. The same year also saw Merita Bank of Finland launch the first mobile banking service. This set the trend and subsequently came the option of the mobile phone allowing the ability to buy movie tickets (Telenor Mobil and Ericsson, 1999) using the mobile wallet, arrange travel (KLM, 2000), and order pizza (Domino’s Pizza, 2001).

2002 saw the official industry standards for mobile commerce developed by the European Telecom Standards Institute. The period since has seen the proliferation of mobile solutions including mobile point of sale, P2P transfers, amongst others, leading the growth in transaction volumes. Be it at the restaurant, grocery store, need to bank, there is no dearth of options available offering the consumer the choice to pay via the phone. The ongoing debate on the preference between Bluetooth Low Energy (BLE) and Near Field Communication (NFC) is expected to keep the mobile payment journey a hotbed of action in the coming months.

While fears of information hacks or unauthorized payments are amongst the primary hurdles faced in the adoption of this technology, a recently released report by IEEE (Institute of Electrical and Electronics Engineers), predicts that mobile payments will be secure enough to take over traditional payments like cash and credit cards by 2030.

market-rewaind-chartLooking back through the years, it is evident on how rapidly mobile payments have evolved since their humble beginnings in the last 1990’s. As the Global Mobile Payments Competition Insight Report 2016 underlines, ‘the continued developments such as integration of payments into products offered by consumer technology companies, and expansion of contactless technology are encouraging growth in in-store proximity mobile payments. At the same time, the emergence of one-touch checkout buttons, peer-to-peer payments and the rise of sharing economies have created new opportunities for remote mobile payments’. All of this is bound to ensure limitless growth for the field of mobile payments supported by a well-entrenched history.

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