As per an estimate, there are currently around 5 billion users of the mobile phone around the world. According to the 2015 statistics, at least 39% of the Americans have been making use of mobile payments. The figure has seen a drastic increase from the year 2014 in which only 14% of the American made the same claim. While the data for the year 2017 is not yet available, it has been predicted that the figure is expected to almost double and lie in the range of 70% in the year 2017. The huge customer base of mobile phones and their utilization, the mobile payments have been evolving rapidly over the past few years and is expected to see a few major technological advancements in the years to come. Let us walk you through the history and evolution of digital wallet in order to give you a better idea of the growing demand.
1983: The year when the blinding formula was put to use by American Cryptographer named David Chaum in an attempt to introduce the digital cash. The blinding formula is known to be an evolved version of the RSA algorithm that is currently being used in the processes of web encryption. This is what laid the foundation for cryptocurrencies or digital wallets.
1994: Although it is nothing but a rumor and has not been verified, it is claimed that a Pizza Hut sale of a pepperoni and mushroom pizza using the digital wallet happened in 1994.
1998: The year laid the foundation of the greatest most reliable, and the most widely used digital wallet by the name of Paypal. The service is still being used by an enormous number of people and its launch was the first event that stirred the evolution of digital wallets.
1999: It was in 1999 that for the first time it was made possible for the customer to purchase movie ticket using their digital wallets or mobile phones, thanks to the efforts put by Telnor Mobil and Ericsson.
2003: The use of digital wallet started to become a norm with more than 95 million people from all over the world claiming to have made a purchase via their digital wallets.
2007: Introduction of the iOS and Android operating system which will evolve to greatly promote and make the use of digital wallets more convenient and user-friendly for the people.
2008: The world of cryptocurrencies is revolutionized with the introduction of a new digital currency by the name of Bitcoin. Even in the year 2017, Bitcoin is a major and reliable digital currency that is widely being used and even traded for business much like Forex.
2011: Google joins the league of digital wallets with the launch of its Google Wallet.
2014: Apple follows Google in its footprint and launches Apple Pay. A year later, Samsung and Android joins the party as well.
2020: As per the estimates, it has been claimed that by the year 2020, at least 90% of the mobile phone users will be used to making payments via their digital wallets.
Kinds Of Mobile Payments:
There are three major options for mobile payments to be utilized with digital wallets. The first one is known as the commerce payment option. It is primarily confined to the online shopping. Once you are done with filling your cart and ordering, you need to enter your credit/debit card information to make an online payment and are provided with a receipt in return. The other form of mobile payments using digital wallets is when the entire information is stored within a mobile device, and contactless mobile technologies are put to use for entering a pin in order to approve a transaction. Lastly, the mobile wallets have been introduced with a primary goal of entirely replacing your current wallet since it conveniently stores your entire payment information.
There is a range of mobile applications which further widen the applications of the digital wallet as well. For instance, certain retailers, such as Starbucks, have their own mobile application that is used to make a payment on the consumer’s own device and the data is then stored in the same device. On the other hand, Mobile POS enables the payment to be made on the merchant’s device, however, such an application of the digital wallet does not store data. Then, of course, there are plenty of online payment services which enable the purchase to be made on the user’s device such as Paypal, Skrill, Payza, etc. Venmo enables P2P transfers and makes use of the consumer’s device to make the bank transfer. You can get a better idea of how huge the application of digital wallet has become with a statistic that $1 billion was transferred via Venmo in January of 2016 alone.
Bluetooth Low Energy (BLE) is another form of a digital wallet that uses a mobile payment account to store the required data and occurs either on the merchant’s device or the consumer’s one. The Beacon and iBeacon introduced by Paypal is one such example of the BLE. Lastly, Digital Wallets are also being used with Near Field Communication (NFC) that uses a mobile device for storage of the data and enables purchasing of goods using the consumer’s device. The finest examples of the NFC-based digital wallet is the Android Pay, Apple Pay, or the Samsung Pay.
There is no argument over the fact that BLE and NFC payments have been made compatible by a large number of retailers already, and the number is certainly expected to rise in the years to come. Due to continuous transmission in the case of BLE, it is more suitable to be used in larger areas. It further enables the customers to receive certain coupons and notifications as well. On the other hand, the user is in charge of activating the NFC payments which make such a mode of mobile payment more useful in the case of one-on-one interactions. All in all, it won’t be wrong to conclude that digital wallets which begun with enabling the customer to purchase their movie tickets online, has come a far way to merge into the everyday payments occurring at a large number of retail stores and it is only fair to assume that the evolution or technological advancement that the digital wallet has up its sleeve will further be revealed with time.