Paying with plastic could go the way of the two-cent piece within five years, according to mobile payments expert Christoph Rohland.
Rohland, chief technology officer of Australian company, Vix, believes mobile payment systems, such as ApplePay, will bring the demise of physical credit cards. "Mobile payments will become ubiquitous." he said.
"With the proliferation of smart phones, all forms of payment cards will become less acceptable for end users as more and more people rely on a single device to manage payments, information and connectivity. "I would predict traditional payment cards to be redundant within 5 years."
Vix provides smart booking, ticketing, data management and payment systems for large-scale transport networks in more than 200 cities around the world.
It was recently brought in to enhance Myki in Melbourne and developed leading platforms Oyster in London and Octopus in Hong Kong.
Rohland said the launch of ApplePay in Australia in 2015 would be the tipping point for the inevitable demise of physical credit cards.
However he also pointed to some significant challenges for the nascent payments system. "ApplePay is hampered by two aspects; first it is only an extension of the credit card pattern, and secondly it is constrained to operate within the Apple ecosystem," he said. "However, Apple might prove me wrong on this and provide an integration into a breadth of apps, which would set a precedent for other ecosystems to follow." Rohland said Australia was already ahead of the world on contactless payments. "Aside from bank cards, other payment platforms will transition from 'closed loop' devices which have to be loaded with credit — like a myki card — to open payment systems," he said. "Open loop payments link the customer's payment device directly to a credit or debit account — such as mobile Near Field Communication, Apple Pay etc.
"Users can utilise the device in the same way they would use the linked card, subject to whatever terms and conditions the card issuer provides to the consumer.
"The devices can even be used outside of the system, if the terms allow, at any retailer that supports contactless payment." However there are still some key challenges to overcome before mobile payments take hold. Rohland said cost was a challenge, since users were loath to accept paying a premium for card based services.
"This is taking away a significant portion of the profit and margins in retail are already very low," he said.
"So the retail industry has a vested interest in reducing these costs, which improves with the increased acceptance of cashless payments." Security and privacy continues to be an important issue.
Rohland said educating end users was important, but on the tech side protecting user information and minimising breaches would be absolutely crucial for mobile payments to prosper. "In most developed countries, including Australia, consumers remain attached to traditional payment methods like credit cards - hence why micro payments have taken off faster in developing countries where the legacy is not as strong," he said. "But it's all a matter of time. In Australia, Pay Pass and Pay Wave are now widely accepted — the next step is going completely mobile. Once consumers see the speed and convenience- benefits in action - and are comfortable with security — it will take off."
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