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Making Cents: Cashing in money for contactless payments?

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Martin Raymond believes the future of financial services and retailing can be seen in the behaviour of “mobile-first millennials” for Irish Examiner.

In Ireland, most of us are just getting used to contactless payments, and are perhaps distrustful.

But resistance may be futile, says an Irish consultant who forecasts trends that will affect businesses and consumer behaviour.

Martin Raymond, the founder of The Future Laboratory, has worked with AIB to study what he describes as “mobile-first millennials” and he believes the future of financial services and retailing can be seen in their behaviour.

“For this group of innovators and early adopters, who represent between 2.5% and 13% of any population, cash is no longer king, as they identify more fluid, frictionless, and fast-forward ways to reduce hassle, save time, and track their money”, Mr Raymond says.

Mobiles are being used to save time and perform a range of tasks in our lives and, increasingly, Mr Raymond says, that will extend to our finances. 

This will go much further than just checking our balances on a banking app, as smartphones will replace our bank cards themselves.

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According to research commissioned by Visa, contactless card payments doubled in Ireland between 2015 and 2018, yet only 45% of people in Ireland are aware that they can also pay by touching their mobile to the card reader in-store

According to research commissioned by Visa, contactless card payments doubled in Ireland between 2015 and 2018, yet only 45% of people in Ireland are aware that they can also pay by touching their mobile to the card reader in-store.

Mr Raymond expects the numbers to explode. They already have in some other countries. 

Only 19% of Sweden’s payments were made using cash last year, compared with a European average of 80%. 

Stockholm’s Royal Institute of Technology says this total could reach zero in as little as five years, as all age groups turn to mobile payments. 

According to The Future Laboratory, we spend an average of 5.6 hours a year at cash points. 

The individual waiting times might not seem long, but once we get used to something being instant, even minor delays can seem like a massive inconvenience. 

Remember waiting for dial-up internet connection; would you put up with it now?

The obvious question is security, but financial institutions are working hard to show that paying with your mobile is not only convenient, but safe. 

For example, when you add your Visa credit or debit card into Apple Pay or Google Pay, the Visa Token Service creates a unique digital identifier (the ‘token’), which replaces sensitive account information, such as the number, expiry date and security code. 

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Banking apps not only tell your balance, but are moving into the arena of financial advice, categorising your spending and giving you spending and saving targets.

When you use your mobile to make a purchase, the token, and not the account number, is exchanged with the merchant and financial institutions to make the payment secure.

The other big concern is that the data people enter online is used to profile them. 

Be it targeted ads or more long-term concerns about private information falling into the wrong hands, social media users are looking at their phones with fresh suspicion. 

Will fears about data misuse and invasion of privacy slow down the conversion to mobile payments?

Mr Raymond thinks not. He believes personal information will be closely managed by individuals, but they will be happy to share it with companies that promise insights into their lives and the potential for improvement.

We see it already with fitness apps that can tell you how far you are from optimal health.

Similarly, banking apps not only tell your balance, but are moving into the arena of financial advice, categorising your spending and giving you spending and saving targets. 

Mr Raymond believes the assistance will grow ever more sophisticated and that consumers will decide that the information they receive is worth their personal data.

This article was originally posted on IrishExaminer.

Find our more about the financial behaviors of this generation in our Millennial Money Market on LS:N Global.

Watch out for The Future Laboratory's FinTech Report launching in January 2019.

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