The plastic credit card is used every day by almost every American representing trillions of dollars, but it will soon be subject to revolutionary change, transforming the lives of individuals everywhere. This will change not only financial companies like MasterCard (NYSE: MA ) and Bank of America (NYSE: BAC ) but technology titans like Google (NASDAQ:GOOGL ) and eBay (NASDAQ: EBAY ) and even retailers like Starbucks (NASDAQ:SBUX ) .
The technology behind the magnetic stripe on the back of a credit card is almost 50 years old, and in the wake of the Target data breach, many people have begun to reevaluate how they make everyday purchases as they call for greater security.
As a result, some have switched from debit cards to credit cards and others from cards to cash. But ultimately, these will be temporary changes. One day soon; a person's smart phone will become their wallet, except it will be safer and more secure. And it will revolutionize the $17 trillion payments industry.
Source: Flickr / Tom Purves.
The mobile payments industry
Individuals are becoming more and more comfortable with the idea their cell phone could one day replace their wallet. A recent study byBain & Company noted while only 3% to 7% of consumers worldwide have used their phones to make a purchase in a store, twice as many used mobile payments in 2013 versus 2012.
Individuals are becoming more and more comfortable with the idea their cell phone could one day replace their wallet. A recent study byBain & Company noted while only 3% to 7% of consumers worldwide have used their phones to make a purchase in a store, twice as many used mobile payments in 2013 versus 2012.
And while a fractional amount of consumers have used mobile payments, between 16% and 27%, depending on the country, are willing to try. In addition, ABI Research expects total mobile payments to grow to $46 billion by 2016 more than five times the $8.5 billion seen in 2011.
Many may be concerned about security, but a mobile device is a computer, and there is a huge opportunity for improved security relative to current standards. In a recent conversation, Jason Oxman, the CEO of the Electronic Transactions Association (ETA) -- which represents the payments technology industry -- noted simply, "I think mobile payments is a very exciting and increasingly important area of the payments industry."
Knowing there are more active phones and credit cards than there are people in the United States, he highlighted mobile payments combines consumers' love of mobile devices and electronic forms of payment, which is a recipe for "huge success." With different aspects of individual's lives becoming more reliant on mobile devices -- from communication, to entertainment and much more -- there is no denying people are becoming more tied to mobile devices. This will ultimately bring about the revolution in the payments industry, which Oxman himself is "hugely bullish," on.
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