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More than technologies, the future of payments will be shaped by value

Sometime in the not too distant future we won’t go through the hassle of negotiating how to split a lunch bill. We’ll do it through an app. Or pay your portion with your credit card, your online ID, or…

Want fries with that? Rodny Dioxin

Sometime in the not too distant future we won’t go through the hassle of negotiating how to split a lunch bill. We’ll do it through an app. Or pay your portion with your credit card, your online ID, or your personal secure token and tip the waiter in Blue Orbit Points.

Our options for paying for goods and services have expanded with innovation in information exchange and portable devices. Where are future innovations likely to occur and what might this look like for consumers?

Going cardless

The development of device technologies has meant speedier payments. Portable EFTPOS machines are one example. Contactless payments like PayWave another.

Already, instead of swiping a card and providing a signature or pin number, you can hold your card to a reader and a tiny antenna in the card transmits the purchase information.

But this still requires contact with an specific payment transaction tool – a card. Paypal was the first to move into frictionless transactions. And if you’re already using Amazon one-click or an Apple ID in store, requiring a plastic card for transactions seems antique.

Mobile phones allow us access to our online accounts through websites and apps, even mobile banking can allow for a “Pay Anyone” at point of sale if you’ve forgotten your wallet.

Soon you won’t need to remember your phone either as wearable technologies are adopted. Wearables such as Google Glass: “Glass, make a payment”.

Another potential development is the expansion of personal tracking devices such as a FitBit or Up. Why not use tiny antennae to send payment information from a bracelet? And there’s the possibility of embedded devices, small chips under the skin, for convenience and security.

The evolution of devices will make point-of sale devices redundant, as consumers bring their own; transaction services integrated into their own personal devices.

Tomorrow’s dollars

The integration of banking data with other data means it is easier to challenge the dominance of currency transactions as a way to exchange value.

Loyalty and reward points are already used as an alternative to currency, or used in tandem with currency for purchase of goods through approved portals.

While these forms of value are constrained to particular organisations for specific transactions, broader applications becomes possible with organisational partnerships.

We could even question the on-going role of official currencies. Online trade means payment transactions are no longer made over the same location.

Or the same universe. Games develop their own virtual currencies and markets allow these to be converted to real-world value.

And another approach is the creation of cryptocurrencies like BitCoin, packets of data that can shared peer-to-peer without a centralised authority. The domination of cash as king – even in the grey and black market – is being challenged.

Are you popular enough?

Got Klout: Int he future, you could use your online influence to get discounts on good and services. Just make sure to bring your friends. Thomas Hawk

But let’s go further – currencies like BitCoins are innovative, but they still define value as something financial. This could change.

Another payment option might be social – could you influence others to make similar puchases? This might be the number of social media subscribers, your celebrity score or an impact measure recorded as part of your personal data.

Reputation indexes like those formed through reliable transactions on Ebay or AirBNB may afford points for further payments.

Or do you prefer to offset your carbon emissions? Have you audited your environmental footprint? Have you swapped a car for public transport and a bicycle? Might these actions be engineered to count towards future transactions?

And back to the FitBit. The upfront investment in exercise and a healthy diet to a state health budget is substantial, prompting recommendations for schemes where well-being discounts are awarded off health insurance or health care payments.

Having this data instantly available means that we could consider real time flexible pricing. You bring negligible reputation and no history of carbon credits? Higher price on a car rental and increased insurance.

High influence and high physical activity data? Pay less at restaurants and pubs. Walk in, walk out and your data history communicates with the products and services seamlessly.

The financial industry is focused on innovation of processes and devices that will speed up clearing approvals so exchange becomes instantaneous in our accounts, to deliver faster and more convenient customer services, and to ensure security and data safety.

What’s noticeable about the efforts in technology and innovation is how much of it is simply catching up to current consumer expectations. We expect instantaneous transactions – why does the bank take days to clear payments?

We expect our transactions to be secure, or to be compensated if there’s a breach. We expect our point of sale service to be fast. We expect the device we use to have multiple purposes. It’s when we challenge ideas about money and value that the future of payments gets interesting.

The Future of Payments conference starts tomorrow in Sydney as part of the CeBIT conference series.

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4 Comments sorted by

  1. Peter Smith

    (None)

    "And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name."

    More seriously, we must retain the right to privacy including the ability purchase good anonymously (i.e. with cash). Unfortunately the tax-man and many others would love to see the death of cash. Ultimately, there must be an opt-out - or preferably an opt-in to this hideous marketing juggernaut.

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  2. ernest malley

    farmer

    America never ceases to lobby, upbraid, coerce & threaten those countries which issue large denomination notes - specifically the Canadian 1,000 and the Euro 500 - ostensibly to foil drug lords & terrorists.
    Snowden makes the real reason perfectly clear.

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  3. Ray Hughes

    IT Worker

    "and a tiny antennae in the card transmits"
    No, it doesn't. A tiny antenna transmits. Antenna is the singular, antennae is the plural.

    "Why not use tiny antennaes to send payment information"?
    Because if antennae is the plural, then there is no such things as antennaes, making it difficult for thems to transmits datas.

    Once I'd unclenched my teeth it was an article which discusses some interesting points. It doesn't raise them (various science fiction writers have been discussing the same…

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    1. Kylar Loussikian

      Assistant editor for business and economy at The Conversation

      In reply to Ray Hughes

      Thanks for pointing that out Ray, I've corrected it.

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