That’s what can be deduced from a recent study by Juniper Research. According to the study, the total value of mobile payments will triple by 2015, to an estimated $650 billion.
Since a piece of that pie is bound for small businesses, it’s a good idea to start getting ready for the proliferation of mobile payments.
What are mobile payments?
Mobile payment refers to paying for a digital or physical good with a mobile phone. It also refers to using mobile phones to transfer money between people, like sending remittance to friends and family. Think of it as a digital payment alternative to (or better yet, an evolution from) cash, checks and credit cards.
What’s an example of mobile payments today?
For you coffee lovers, you are probably familiar with the mobile payment system at Starbucks, which rolled out nationally at the beginning of the this year. The retail coffee giant, with its almost 6,800 stores, can take in-store payments from consumers with the Starbucks Card Mobile app on their Android, iPhone and Blackberry phones.
Starbucks’ payment system utilizes digital bar codes which display on phone screens, which are scanned at checkout. In addition to providing an easy and trendy way to pay for lattes and espressos, consumers can also keep track of their “stars” in Starbucks’ reward program.
What is the future of mobile payments?
The future has already started, and it’s called Near Field Communications (NFC).
NFC technology allows for data exchange simply by touching devices. It’s expected to become a standard feature in smartphones. This summer, Google and PayPal will launch their NFC mobile payments system which are sure to help push mobile payments into the mainstream.
PayPal Mobile will launch its NFC peer-to-peer payment solution later this summer. The Android app will work with the Samsung Nexus S, the only NFC-enabled phone on the market right now. With the app, users can transfer money between each other by simply tapping their phones together. Check out the demonstration video below:
Google Wallet is the other NFC mobile payment solution that’s sure to make waves this summer. Google has teamed up with major retailers like American Eagle Outfitters, Bloomingdales and Subway, to kickoff its service.
Google Wallet stores consumers’ credit card information, as well data such as reward points, coupons and gift cards. Payment is completed by tapping or waving the phone on a MasterCard PayPass terminal.
Like PayPal Mobile, Google Wallet only works with the Samsung Nexus S (for now), but Google plans on producing NFC stickers to place on non-NFC phones.
Unless you’re an early adopter, it’s fine for your business to wait till NFC mobile payments start picking up traction, and more phones! But be ready, mobile payments are coming to a store near you.