Are Mobile Payments Going To Be Bigger Than Cash Or Credit By 2020?

There’s no doubt that mobile payments are on the rise. But do they have the momentum and provide enough benefits to give cash and credit cards a run for their money by 2020? Yes they do, says a new survey of technology experts and stakeholders by the Pew Internet & American Life Project released today.

The study, conducted with the Elon University’s Imagining the Internet Center, surveyed 1,021 Internet and tech experts and users, and although the majority of respondents saw a fast-approaching future for mobile payment systems, some said they believed the trend toward mobile payments will slow down.

Sixty-five percent of respondents said they believe that by 2020, most people will have embraced and fully adopted the use of smart-device swiping for purchases, nearly eliminating the need for cash or credit cards. But 33 percent said they believe that mobile payments will not have gained traction by 2020 because of both privacy and security concerns. Detailing this finding the study authors write that: “The security implications raise too many concerns among consumers about the safety of their money. And people are resistant to letting technology companies learn even more about their personal purchasing habits.”

Currently, if you use your cell phone to make mobile payments, your level of protection against financial liability if something goes wrong varies depending on your wireless carrier’s policies and your cell phone contract. Last year at this time, Consumers Union, the advocacy arm of Consumer Reports, called on the big wireless carriers to strengthen contracts to protect you when you make mobile payments.

For more on some of the hidden costs of mobile payments, see Consumer Reports’ New ways to pay, and Consumers Union’s Mobile payments tip sheet: What can consumers do now.

The Future of Money in a Mobile Age [Pew Internet & American Life Project]

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  1. umbriago says:

    “People are resistant to letting technology companies learn even more about their personal purchasing habits?” Gee, why? They cough up every single detail of their lives on Facebook and Twitter anyway. Wasn’t there a website once that let people see where you were and what you were spending your money on?

    But as an Internet and tech expert (i work in the biz), I love good ol’ cash and hope to never stop using it (and hope to never run out for that matter).

    My dope dealer feels the same way, pretty much.

    • MaxH42 thinks RecordStoreToughGuy got a raw deal says:

      There still is; it’s called FourSquare.

    • dulcinea47 says:

      Coughing up “every detail” of my life on FB is a lot different than letting someone access my money through my cell phone.

    • maxamus2 says:

      Except people aren’t. You may think “everyone” is on FB and T but that is far from true. And many (a vast many) that are on FB rarely even go there.

  2. Blueskylaw says:

    “Are Mobile Payments Going To Be Bigger Than Cash Or Credit By 2020?”

    Yes, because there is nothing I like better than trying to get an internet connection on a slow phone with a slow connection on a one inch square screen at home while staring at my computer with the 21 inch monitor.

  3. BigDragon says:

    Exactly what percentage of cell phone customers have smart phones? I seem to recall it was 25% a year or two ago. I’m a big fan of modern tech, but not even I can stomach the ridiculous monthly fees that go along with smart phone ownership. I can see mobile payments taking off, but I cannot see them going beyond what cash or credit currently provides. It’s a complementary solution, not a replacement.

    • Blueskylaw says:

      I owned a “smart phone” a few years ago because of a free upgrade, so I thought I would give it a try. I basically never used the internet on it because I never REALLY needed to, not that it was easy or anything. The touch screen started giving out and made using the phone impossible and those DAMN mandatory charges really pissed me off. It would be like me buying a Ford and them telling me I could only buy gas from Exxon Mobile, and I had to buy the gas every month even if I wasn’t going to use the car. The boardroom conversation must have been something like this: How can we squeeze more money out of our customers? I know, let’s call it a smart phone and charge a mandatory data fee even if they will never use it. High fives all around and bonuses for everyone (not the common workers of course, just the executives).

    • pecan 3.14159265 says:

      I’ve had a smartphone for years now. Obviously, the cost is higher than if I had a dumbphone, but it’s worth it because I can do a lot of things I couldn’t do with a dumbphone and it’s made things a lot easier. I can manage my bills a lot better because I can set up calendar alerts and write notes. I can search my calendar and send the information directly to my parents. With apps, I can pay bills while I’m on the train, download podcasts, and use GPS. And when I’m at a store, I can use my phone to price match.

  4. Buckus says:

    No. Since I have to write more than that, then double no.

  5. dush says:

    Mobile payments are made by the software on the device, it’s not tied to a specific phone number right?

  6. speaky2k says:

    I have never used a smart phone wallet / mobile payment app. Does anyone know if the data transferred using these goes against your data cap?
    If so, with so many companies having smaller & smaller data caps I think people will start to say no to any app that uses data and continue to pay with credit/debit cards. Perhaps if we went to what most of Europe has on their cards (chip & pin) then people would switch to that quicker than the phone apps.

  7. SeattleSeven says:

    A bunch of old people will whine about this and smart phones and email and AOL and how they will continue to write checks at the supermarket until the end of days.

    This will be popular (it already is at Starbucks). It is convenient with less crap to carry around. Like usual, the security concerns are overblown and not really an issue. It is just a credit card.
    Cash and cards will always have a place, but so do all in one devices (phones).

  8. Tiercelet says:

    …so a survey of people who support and develop a technology say that the technology’s going to be really hot? How impressive.

    Seriously, I’m mystified as to why anybody thinks this is a good idea. I mean other than the companies that would like to tap the revenue stream. What possible benefit does mobile payment provide to me as a consumer, other than not having to carry a tiny one-ounce piece of plastic?

    • aleck says:

      Let me demystify this for you.

      How about more secure than a piece of plastic? What happens if you lose the piece of plastic? Chances are somebody will pick this up and rack up charges. You don’t care, but somebody has to cover the cost. A lost phone can be instantly deactivated, locked, etc. Payment authorization on the phone can include fingerprint, voice match, password, etc. Unlike a card that just needs to be there.

      How about cheaper? Visa/MC/AMEX have the monopoly on the plastic payment system and they are milking it for all its worth. As a consumer you probably don’t care, but a lot of merchants do. I will very much welcome more competition to the payment market, which will inevitably make this process less expensive.

      How about more convenient? Can you card tell you right now how much balance you have left? How much you’ve spent on groceries this month? All this is possible with the electronic payment system.

      • Hi_Hello says:

        if you lost your phone/credit card, you can call and have either one of them disable. It’s all the same. Although if you lost your phone, and not near another phone, that might take awhile.
        How much are you liable for mobile payments that got lost or stolen and for someone reason people didn’t lock their phone?

        For payment authorization, people are lazy. They want it to be easy. Credit could require ID, photo, pin and all that stuff but people don’t want it.

        As for convenient part. I know exactly what’s my balance is on my card. not to the penny. I like to round up. Whoever doesn’t know shouldn’t really be carrying a credit card.

        As for cost. You might have a point about this, but how much does it cost for these mobile payment system?

      • Tiercelet says:

        What happens if you lose the piece of plastic?
        The same thing that happens if you lose the phone. Only you aren’t also out the expense of replacing a half-a-grand smartphone. A lost credit card can be instantly deactivated too, by simply making a phone call.
        As for improved security features — okay, you’ve got me. When I buy a smartphone that can fingerprint me & do god knows what with the results, I’ll be able to have biometric security on my groceries. Yay. Meanwhile there’s a reason that most merchant agreements actually prevent them from demanding ID before accepting your credit card, and personally I’m fine with where the balance currently lies between security and convenience/privacy.

        How about cheaper? Visa/MC/AMEX have the monopoly on the plastic payment system and they are milking it for all its worth.
        Sounds like a great reason to regulate them, and promote the development of alternative credit card providers. But if you don’t think adding another credit card provider would make it less expensive, then you have no reason to believe that mobile payments providers won’t collude just as hard. Nothing in a market is automatic except people trying to rip each other off.

        How about more convenient? Can you card tell you right now how much balance you have left? How much you’ve spent on groceries this month?
        …no? But my smartphone can if I just check a bank or credit card app. Electronic payments aren’t the magic here, it’s the internet connection. Of course, I don’t have those apps on my phone, because they give people way too much access if I happen to lose it.

    • Hi_Hello says:

      yea, they need to ask more diverse group of people.

      I would hate to be out of battery without cash and I can only pay with my phone.

  9. Captain Spock says:

    I’m confused… how will this replace “Credit” cards where I am borrowing against my available credit? Will Cell Phone companies become the credit card companies?

    • matlock expressway says:

      “[65%] believe that by 2020, most people will have embraced and fully adopted the use of smart-device swiping for purchases, nearly eliminating the need for cash or credit cards.”

      These people don’t get out much.

      There are still plenty of stores that don’t take credit: mom-and-pop shops, smaller chains, franchisees of bigger chains with a grudge [for some reason, the Chipotle near me only takes cash]. If neither debit nor credit has “nearly elimitated” cash in the previous 20-30 years, I’m not so sure why anyone would think NFC will nearly eliminate the need for cash or credit in the next 8.

      More plausible explanation: the survey was poorly worded (perhaps unintentionally) in order to elicit the expected result. Big surprise.

      • matlock expressway says:

        Ugh. I meant to post that as a separate post, but this site doesn’t seem to care that I refreshed the page and didn’t submit it as a reply to your post.

      • Willow16 says:

        There is a small grocery store in town that will not allow you to use a credit card for a charge that is less than $5. There have been times when I have run in to buy a gallon of milk and must have cash.

  10. bennilynn says:

    It’s not like personal information is any safer the way we pay for things now. Between credit card skimmers, fake ATMs, or even the worry of actual people lifting your credit card numbers or personal information (such as waiters or, well, anyone you hand your cards to), the risk is already there. Any agreement to associate a phone with a bank or credit card account would have to come with certain consumer protections against fraud, of course, but that’s true of anything.

    Five years ago, I scoffed at the notion of these expensive smart phones becoming integral to my life. I was wrong. GPS, maps, online reviews, bar code scanners, instant information at my fingertips… It’s terrific technology that’s only going to get better (assuming we can keep the cell phone makers and service companies competing with each other).

    I’m looking forward to the day when I don’t have to lug my wallet around.

  11. 420greg says:

    I use one all the time called Square Payments (use to be called card case). It is tied to my debit card. Mostly food trucks and flea market booths and other more likely to use a ‘square’ device.

    I just say put it on my tab when I get to the register. They click the tab button in their Square Merchant app and it shows my name and picture (knows i’m there via gps),and its done. Nothing to sign or no reason to take out my wallet. A receipt shows up in my email or via sms instantly. And since it shows my photo it would be hard for someone else to use it, even if they found/stole my phone.

  12. Ed says:

    only of the mobile payment system is hooked up to my credit card. No way in heck would I allow that to be hooked up to my bank account.

  13. zoomlens says:

    You really should get someone who knows something about payments law to review your posts on this topic. Your statement “Currently, if you use your cell phone to make mobile payments, your level of protection against financial liability if something goes wrong varies depending on your wireless carrier’s policies and your cell phone contract.” is absolutely incorrect. The vast majority of mobile payment products in existence today use credit or debit cards. They are covered by credit /debit card regulations. The only time your wireless carrier’s policies would matter is if the payment mechanism is to charge the payment to your wireless bill. Consumerist should be embarrassed for posting such misinformation. Such a disserve to consumers.

  14. SPOON - now with Forkin attitude says:

    I thought the last line of the article was supposed to be a question, not the title? I confused am .

  15. PhilipCohen says:

    “But do they have the momentum and provide enough benefits to give cash and credit cards a run for their money by 2020?”

    No, they don’t; certainly not credit cards, and those that think otherwise obviously have been spending too much time with John Donahoe and Alice down the rabbit hole …