Cellphone Taps to Challenge Credit-Card Swipes by 2020, Experts Say
Will everyone use their phones to pay for vending machine snacks by 2020?
Wallet, keys, phone — the technology to eliminate one item of the standard doorway checklist is already here. Google Wallet lets users pay using coupons and funds from their Citibank and MasterCard accounts stored in Android smartphones. In stores that have Google Wallet readers, users just tap their phones to the readers to pay. PayPal and a group of companies called Isis are working on their own “mobile wallets” that would let people pay using Visa, American Express and Discover.
But will people really use these new services? To find out, three researchers at the Pew Research Center in Washington, D.C., and Elon University in North Carolina surveyed 1,021 technology experts. They published their results as an in-house paper today (April 17).
When forced to choose a side — mobile wallets by 2020, yea or nay? — the majority of experts thought the technology would reach the mainstream in less than 10 years. Sixty-five percent of the experts surveyed agreed that by 2020, most people will trust and use their smartphones as payment devices, perhaps eliminating cash and credit cards altogether. On the other hand, 33 percent thought people’s worries about security and privacy will keep cash and credit cards as the dominant method of payment in developed countries.
But the real point of the survey was to elicit comments from experts. "We want to get the experts themselves talking,” Aaron Smith, a Pew researcher who worked on the survey, told InnovationNewsDaily. He and his colleagues read every response they received, then organized them by general categories in their report.
Proponents said people will embrace the convenience of having everything, including money, on one device. Tapping a smartphone is not too different from swiping a credit card, so people are psychologically prepared, proponents said. “There is nothing more imaginary than a monetary system,” Susan Crawford, a former technology policy analyst for the Obama administration, wrote to the survey. She said cash is just “printed slips of paper” representing value. “Of course we’ll move to even more abstract representations of value,” she said.
“Credit and debit cards will almost be dead by 2020,” said Stowe Boyd, a futuristic consultant.
Some experts thought, however, that no matter how eager people are to start tapping their smartphones at stores, they’ll have to wait for companies to build the networks to accept those payments.
“The driver here will virtually 100 percent be whether or not the credit-card industry decides it can make more money through changing technologies,” said Jonathan Grudin, a Microsoft researcher. Fred Stutzman, a researcher at Carnegie Mellon University, thought companies would overhaul their payment systems by 2030, instead of the 2020 date the survey offered. Others added that developing countries that don’t already have an established banking system will get this high-tech system first.
Mobile wallets in the future will be even more secure than credit cards today because they’ll be able to confirm transactions with thumbprints, iris scans or other biologically based checks, some experts said. But those skeptical of the 2020 date thought people will nevertheless worry about saving all their banking information online. “The monetary incentives for cyber-criminals to attack payment systems are so great that people will not migrate,” said Henry Judy, a lawyer focused on corporate and technology law. Judy himself didn’t think that security systems will become inexpensive and widespread enough for mobile wallets by 2020.
Even if they weren’t worried about security, people will be wary of a cloud-based payment system that can track what they buy, some survey respondents said. People will continue to use cash to try to stay anonymous. They might be skeptical of how companies and the government will use their information. Or they may be buying things they’re embarrassed about, such as tobacco, adult materials, gifts for a mistress or illegal substances. “Cash hides activities that people want to keep beyond the scrutiny of the government,” said Stephen Hoover, a lecturer at Mingshin University of Science and Technology in Taiwan.
Many survey respondents thought there will be a socio-economic dividing line between mobile wallet users and cash and credit card users. Younger, wealthier people will use the new system, they said, but older adults and working class people will continue to use cash and credit cards more. They might not feel very strongly about mobile wallets either way, but they’ll still be “extremely slow” to change, said Danah Boyd, a researcher at Microsoft.
Many experts also thought tap-and-pay phones will just complement cash and credit cards, not replace them. Cash, cards and checks have persisted for generations, the experts said, and they’re not going away anytime soon. ”When credit cards arrived, checks did not disappear, and neither did money,” said Amber Case, CEO of a company that offers location tracking for apps. “Retailers and businesses must accept another form of payment.”
A few experts looked beyond mobile wallets, to guess at what else may happen with money in the future. Technology reporter Jeff Jarvis imagined new currencies, such as points for buying ecologically friendly products. Food systems researcher Cyprien Lomas thought people would start to track their own buying habits with software.
As smartphone technology advances and people debate about tap-and-pay phones, the Pew Research Center wanted to see what experts thought people’s wallets would look like by 2020, Smith, the Pew researcher, and his colleagues wrote in their paper. The result — a large survey of experts — is somewhere between one pundit’s ideas and the large, representative surveys of everyday people that Pew usually conducts. "It's nice to get a sense where people who study this feel this thing is going to go,” Smith said.
The research center doesn’t plan to do anything more with the answers they’ve gathered, though many other researchers use Pew studies for their own work, Smith said. "Our role in the world is basically to put data out in public conversations,” he said. “Hopefully, it's useful to people as they're thinking about how this technology might evolve.”