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What happens when phones replace cards


4 min read

Even though mobile payment services like Apple Pay and Android Pay have been on the market for a few years they haven’t made a big impact, until now. A likely effect of their growing popularity is that regular payment cards will start being replaced by mobile payments. But in the long run, mobile payment services also have the potential to shape our whole shopping experience and change the way we handle our finances.

According to Juniper Research, 2.1 billion consumers worldwide will use mobile payment services to make purchases or transfer money by 2019, an increase of 30 percent in only two years. In another study, conducted by Visa, 77 percent of European consumers said that they are now using their phones to keep track of their finances, transfer money or make payments.

Many services are collected in our phones

That many will start to abandon their plastic cards, in favor of mobile payments, is not hard to imagine. There is really no reason to hold a credit or debit card up to a payment terminal when your phone can do the same thing with higher security. Because of that, we are likely in the middle of a transition period where cards are slowly being phased out in favor of virtual cards in our phones.

But the transition to mobile payments isn’t just about replacing plastic cards. As opposed to regular cards, our phones have the ability to combine payments with a lot of other services. In the future we will likely use mobile payment services to not only collect all our payment cards, but also for transfering money, collecting discounts, tickets and offers from merchants. With the new European payment services directive, PSD2, these services will also be able to get access directly to our bank accounts. That means that we, in the near future, will be able to use one payment app for everything from in-store purchases, to paying our bills and transferring money to our friends.

Phones improve the shopping experience

These mobile payment services also have big effects on merchants. One example is the possibility that phones might replace traditional payment terminals. Within a relatively near future, a store clerk will only need to download an app to his or her phone and put in an account number in order to accept payments directly from customer’s phones.

This, in turn, would free up the store clerks to accept payments anywhere in the store, instead of making customers line up at the register. And because these mobile transactions are both fast and secure, and only require them to download an app, the threshold to starting a pop-up-store, for example, are significantly lower.

Another good example of how mobile payments can be used to improve the shopping experience comes from Starbucks. Via their app, the most popular payment app in the US, customers can buy their coffee in advance and just pick it up in-store. The app is also directly connected to Starbucks reward program, which means that customers are given special discounts and offer when they shop with their phones.

Bambora helps you build experiences

It is important for merchants to think about how they can use mobile payments to develop the shopping experience for consumers. To help our customers create those new experiences, all our payment terminals are equipped to accept contactless payments and mobile payment services like Apple Pay, Samsung Pay and Android Pay.

A good example of how this technology is already being used to improve the customer experience is our partnership with the Norwegian company OrderX. Their product uses Bambora’s terminals to speed up beer sales and reduce queues at big events. With OrderX’s solution, festival workers only have to line up empty beer glasses in front of a long row of payment terminals. When someone wants to buy a beer, they just walk up to one of the terminals, hold their phone or contactless card up to it and then the glass is filled, from the bottom, in a few seconds. See the video here.

One of the strengths of OrderX product is that it is based clearly in customer behavior. Most concertgoers or festivalgoers already have their phone in their hand when they go to buy beer, and by speeding up the buying process, lines are kept to a minimum to elevate the experience of the whole event. OrderX also offer customers the possibility to pre-order their beer in an app to speed up the process even more.

In order to appeal to a younger generation of consumers, who value experiences and use their phones for pretty much anything, there is a lot to be gained by looking at how these mobile payment services are being used and can be used. At Bambora we see it as our mission to provide the technology needed for these services, but also to help you utilize their full potential.