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The Paradox of Plastic Currency: Credit Card Nears to the End of its Reign

21 minute read

The Triumph of the Smart Wallet

Since NFC isn’t cloud technology but has to be physically present in the phone, it has pushed smartphone manufacturers (and of course Google) to the forefront. We always have our phone on hand and it is incredibly comfortable! All you have to do to pay for your purchase at a shop or restaurant is to place your smartphone near the card terminal just like you would a contactless card.

Nokia built the world’s first NFC-enabled phone in 2006; the first Android OS phone, the Samsung Nexus S, entered the market in 2010. This means that your phone is the only thing you need to bring along – it replaces your bankcard, ID card and public transport tickets.

Last summer, the analysis specialists at Juniper Research predicted that the percentage of contactless mobile payments is on a significant rise and should quintuple in the next few years. Visa Europe recently predicted that by 2020, every fifth European will be using mobile payments.

Apple Pay, Samsung Pay, Google Pay

Interestingly enough, Google and Google Wallet are not on the top of the market; instead it’s Apple and Apple Pay. According to Juniper Research, Apple Pay dominates the contactless mobile payment market – half of all payments are made using their services. Apple Pay is followed by Samsung Pay and Google Pay.

Apple has achieved swift success regardless of the fact that it’s been uncharacteristically slow and conservative in the field. The app was launched in 2014 and was only available to American merchants and buyers for a long time. The service is now expanding across the globe but is taking its time – See where Apple Pay is available.

Apple Pay can be used once you link your bankcard to the app. It’s possible to pay in a physical shop using an iPhone or Apple Watch or online (in Safari) using an iPad, PC/laptop or iPhone.

Apple talked about expanding the use of NFC technology, incl. to open doors and car doors last summer.

Analysts believe that Samsung Pay and Google Pay will also prosper. Apple’s success is attributed to the fact that their customers are heavier users. Android users tend to be more conservative when it comes to new tech.

Google rebranded its digital wallet in January 2018 when it merged Android Pay and Google Wallet into one service that is now called Google Pay or G-Pay. The service can be linked to most credit and debit cards.

Samsung Pay offers similar solutions, however, one of its advantages is the fact that in addition to NFC it also uses MST (i.e. magnetic secure transmission) technology, making it compatible with most card readers.

Speaking of interesting payment methods, a service called the M-Pesa is popular in Kenya. To use the service, the customer deposits their money at a local shop that then sends the money on its way via “mobile waves”. It’s so popular that even the country’s flag airline, Kenya Airways, now accepts M-Pesa payments. A similar service, EKO, is used in India. A customer deposits money to their Bank of India account from a shop or pharmacy for a reasonable fee. So, it may very well be that soon we might see EKO or M-Pesa side-by-side with – or perhaps replacing – Google and Apple as the main mobile payment providers.

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