Digital payments have transformed the global economy - and
have exploded over the past decade. But they are far from new have their roots
in telegram technology, which was operational in the 19th century.
For example, in 1871 Western Union debuted the electronic
fund transfer (EFT). And in 1959, American Express introduced the first plastic
card for electronic payments.
By the 1960s, ATMs were popping up on most street corners,
and customers were getting used to managing their money through systems that
relied on early computing.
By the 1970s, the developed world had become more reliant on
computers as part of the buying process - and from there, the very first debit
cards were launched - just 10 years later in the mid-80s by Barclays.
Today, the vast majority of transactions occur online and
digitally, from ewallets and blockchain to contactless payments on credit
networks. Contactless payments have exploded too, with advancements in Near
Field Technology making transactions even simpler for customers and businesses
alike.
Mobile technology and the digital payments space
One of the biggest
changes to disrupt the digital payments space has been through mobile
technology, combined with NFC - which means smartphones have now essentially
become payment vessels, taking the place of plastic, chip, and pin cards. But
as this field develops, the natural progression has led to mobile technology
companies enabling businesses to simplify their payments even further.
Apple recently announced the launch of Tap to Pay - a new
streamlined contactless payment service for business vendors that enables them
to simply download the software, install the settings and start using their
iPhone as a payment receiving device. The move is shaking the digital payments
space because it means current companies that supply payment device machines
are no longer required if business owners decide to swap to the iPhone Tap to
Pay method.
Developments in NFC technology and digital payments
Apple’s new Tap to Pay is made possible through NFC which
enables the communication between two electronic devices over a distance of 4cm
or less. NFC offers a low-speed connection through a simple setup that can be
used to bootstrap more capable wireless connections.
The move by Apple has been hailed as a leap forward for the
software point of sale (SoftPos) technology in the marketplace, explains Brad
Hyett, CEO of Phos, a democratising payments fintech launched in 2018. He says,
“One of the biggest challenges to the widespread adoption of software point of
sale (SoftPoS), the technology that enables merchants to accept card payments
directly on their phone or mobile device, is that up until now, it was not
supported by iOS operating systems.”
Hyett points to the tech giant’s acquisition of Mobeewave as
one that has addressed demand in the market, and believes the appetite for
SoftPos is only going to grow as consumers continue to turn their back on cash
in favour of contactless payments.
“With Apple entering the SoftPoS space, this validates the
technology and will put further pressure on the traditional POS manufacturers
who have failed to successfully address the SME market. It is important to note
that Apple currently represents around 30% of market share, while Android
remains the dominant OS,” he says.
Since the pandemic and the shift digital transformation has
caused, the marketplace also has a radically different expectation - along with
new entrants motivation further changes in the space. “Expectations of what a
business will look like in the future have changed fundamentally. With the rise
of covidpreneurs over the last 18 months, there’s been a global surge in sole
traders who are choosing more fulfilling employment over a steady paycheck.
“This shift in the makeup of the global economy is driving
the rise of an ‘application marketplace’, whereby business functions are
increasingly moving onto the mobile devices of business owners. That is, these
new market entrepreneurs are increasingly running their business out of a
tablet or mobile device, rather than traditional PCs and other legacy systems.”
A natural technology progression
The use of NFC technology and new digital payments methods
has also dramatically increased over the past three years. Andrew Edem, Global
Head of Innovation at PPRO, points out that
use of digital wallets among consumers in the US saw a 27% leap in 2020,
up from 22% in 2019.
He says, “The new Apple feature ‘Tap to Pay’ is an
opportunity for US merchants to improve in-person checkout experiences by
allowing contactless payments directly on a mobile device… It's crucial that
retailers are equipped with the right technology and infrastructure to not only
enable these payment methods, but create seamless user experiences that make
shopping easy for consumers, wherever they are.”
It also comes as no surprise that Apple has been the first
of the tech giants to hit the post, as it were. “Apple has consistently been a
leader in boosting mobile payment experiences within the US market and
increasing mobile adoption among consumers, and I think we’ll continue to see
additional payment methods offered by both large and small merchants, as we’ve
seen in other regions,” Edem says.
Innovation and NFC in Softpos technology
Hyett concludes, that mobile devices are becoming the core
hardware estate for businesses across a range of verticals. For example, in the
transport sector, taxis are now using tablets to run in-ride advertisements as
well as accept contactless payments.
He adds “These all-in-one solutions are powered by software
point of sale (SoftPoS) technology, streamlining hardware estate to deliver
more functions on fewer devices. This reduces costs for merchants by helping
them sell more while also offering a cheaper alternative to traditional payment
terminals. We look forward to seeing what innovations and new market entrants
bring to this sector.”
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