2020 Hindsight: A Look at Cash, Credit and Smartphones in 2020

Who needs cash? Who needs credit cards? They’re so old-school—and frankly so vulnerable to being misplaced or stolen –that they’re an inducement to danger. Fortunately, this is about to change…maybe.

A new report from the Pew Research Center’s Internet & American Life Project and Elon University’s Imagining the Internet Center brings news that mobile payments could all but eliminate the need to carry money or credit cards around. In advanced nations, at least, a majority of consumers will trust their phones and mobile devices to conduct end-to-end transactions.

And when will this happen? In the year 2020. Yes, 2020.

For the record, even that date carries multiple caveats. A strong majority, 65 percent, of the technology experts surveyed for the report signed on to that timeframe. The rest of the respondents disagreed with the premise (there was no middle ground allowed), and contend that this discipline will not gain sufficient traction in the timeframe discussed.

To be sure, the Internet terrain is pockmarked by failures, radical technologies that were designed to fundamentally transform human behavioral patterns and, well, didn’t. There are also plenty of legitimate reasons to doubt the broad-scale adoption of mobile payments.

To start with, not everyone has a smartphone—according to the Federal Reserve, the number is still only 44 percent of the population—and not everyone will anytime soon. Security and privacy concerns have always loomed large, and they will continue to do so.

Besides, consumer fears are not the only impediment to success: Credit card providers, among other business entities involved in the mix, will need to redirect their resources, and that likely won’t happen overnight. Most of them have considerable investments in the existing infrastructures, and a top-to-bottom overhaul probably isn’t on the priority list yet. Even when it does happen, everything from standards and the resulting interoperability to competitive positioning could lead to market fragmentation.

Still, it’s also important to note that however futuristic the concept of mobile payments seems, in some ways it’s already here. Consumers aren’t only using their phones to talk: According to other recent Pew Internet studies, 10 percent of Americans have used their phones to donate to charity via text message, more than a third use them for online banking, and almost half, 46 percent, have used a mobile app to, well, buy another mobile app.

Other research backs this up too, and retail seems a particularly active area. Analyst firm comScore reports that not only have 38 percent of smartphone owners used their devices to make buy products, but half the U.S. smartphone user base has gone online to look up deals while they’re inside a brick-and-mortar outlet, and nearly one in five even scanned barcodes.

As for the ‘advanced nations only’ argument, here’s another nugget cited in the Pew report: Users of Kenya’s M-Pesa system now send money amounting to 20 percent of the country’s entire GDP via text message.

For all Internet prognosticators, the reality is that this might be yet another area where we don’t know what will happen, or more importantly when. There are statistics and anecdotes to back up virtually any hypothesis, just as many changes have blindsided even the most accurate analysts.

The groundwork for a radical transformation has been laid. While there are certainly standards issues to work through, particularly at the back end, many of the tools needed to change payment habits are already in place. There’s a new generation that can’t remember a world without iPhone and iPad apps for everything. And some emerging mobile technologies have allowed business and consumers alike in developing markets to leapfrog landline infrastructures.

It may be that 2020 is the year of mass mobile payments. It may, as some analysts claim, take more time than that. But let’s not be surprised if it takes less.

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