Since the beginning of human existence, we have excelled at producing goods and figuring out the best way to pay for them. What began with bartering goods turned to more sophisticated methods of payment like metal and paper currency, which has transformed into making payments with credit cards and smartphones today.
Less than 25 years ago, the notion of paying for something with a mobile device seemed outlandish, nothing more than a pipe dream. But now? The use of a mobile device for payments is not only accepted but becoming the norm in our society.
How did mobile payments become what it is today? A brief look at its history tells the tale.
A look back
The year was 1997. Coca Cola introduced a small number of vending machines in Helsinki that would allow customers to purchase their drink via text message. This small, but innovative use case is considered the first example of mobile payments, and introduced the idea of using mobile features for transactions. That same year, Merita Bank used text messaging for bank account transactions, again bringing the ability to conduct transactions via phone to the forefront.
This, of course, happened long before the smartphone was even on the minds of mobile companies, yet the idea that mobile phones would have use cases far more complex than the simple functions of making and receiving calls was already gaining steam.
As time went on, we saw mobile phones used to buy movie tickets (Ericsson & Telnor Mobil, 1999), arrange travel (KLM, 2000), and even order pizza for delivery (Domino’s Pizza, 2001). By 2003, 95 million cell phone users worldwide had made a purchase via their mobile device. And the market only grew from there. The iPhone’s introduction in 2007 completely revolutionized the way we look at mobile devices, making mass mobile payment and banking a true reality. See the full history here.
Today, the proliferation of mobile wallets (Isis, Google Wallet, Passbook, etc.), NFC, QR codes, and other mobile solutions has infinitely increased the opportunity for mobile transactions. Almost daily, we as consumers can make the decision to pay with our phones, or pay with cash.
Whether at stores, restaurants, banks, or between friends, mobile has opened a world where financial transactions can occur at an individual’s convenience, with a few taps of the fingers. What’s more, it’s not just about using your phone to make a purchase. Mobile financial solutions like Mozido’s platform give individuals the ability to manage all their financial transactions on a mobile device, essentially making a user’s phone their bank.
This is possible because of the rapid explosion of smartphones across the globe. According to recent numbers from eMarketer, 1.76 billion people (or just under 25% of the world’s population) will own and use smartphones in 2014 – a number that is more than 25% higher than just a single year earlier. With this kind of continued mobile penetration, we can expect more than one-third of the global population to own smartphones in the next few years, providing an incredible market for mobile payments.
Paying by phone could even become a replacement for cash.
A look forward
Alas, we can’t predict where the future of mobile payments will be headed in five, ten, or even twenty years. Heck, with the way technology progresses these days, it’s hard to say where mobile payments will be in six months. What we do know is that by 2015, the mobile payments industry is expected to reach $906 billion – a huge jump from $240 billion in 2011 – showing us that mobile payment is here to stay.