It seems the world is going paperless even when it comes to money. But what about plasticless? Plastic credit cards and debit cards may also go the way of cash thanks to something called the e-wallet or digital wallet. This is an electronic wallet that lives inside your smart phone that would take the place of credit cards or cash. The user simply takes the cards they already have and loads them into their digital wallet.
Depending on the brand this takes a few different forms when completing a transaction.
With Google Wallet the user simple taps their phone against the pay terminal, enters their pin inside the phone app and the transaction is completed.
Square sends the POS system a name and picture of the user. If the picture matches the user the cashier approves the transaction and the money is transferred.
When using LevelUp a QR code is displayed on the user’s phone screen that is then scanned by the cashier.
These are some of the biggest players in mobile payment right now. As of yet there is no clear winner or standardized system of payment. Each of these brands has their own advantages and merits.
LevelUp is great for merchants and small businesses. There are no hardware costs, no transaction costs and information is automatically recorded and stored with each transaction that businesses can use for retargeting. They also released connected apps. This allows others apps and software to connect to the LevelUp system to enable customers to order, pay and take part in royalty and rewards programs all in the same place.
Square is unique in that they are working towards a whole system solution. Were as LevelUp and Google Wallet may just be focusing on pieces of mobile payment, Square wants to dominate the entire game. Jack Dorsey, the founder of square, explained their business plan as follows
“A lot of folks are looking at parts of the equation and Square is looking at the entire thing. If you’re not solving for the entire experience, you are putting those seams in front of the customers — and the customers see that. And they have all these friction points, and it actually slows down the business.”
Google Wallet is backed by the richest internet company but is pretty run of the mill otherwise.
What I think is really cool about mobile payment is the automatic use of coupons and promotes. Instead of finding coupons and cutting them out a user’s digital wallet will already be aware of the sale and automatically apply the sale price at the time of the transaction.
Like I said there is no clear winner yet but Starbucks may speed up the process. In a shift of priorities announced by Howard Schultz the company wants to “adjust to technology-driven shifts in its industry. As part of [this] new focus, Mr. Schultz plans to work … on what he calls “next generation (of) retailing and payments initiatives.” In other words which ever mobile payment brand Starbucks decides to carry could receive a major boost in business.
Although we may not want Starbucks spearheading this new movement after their mishap earlier this year when the company left customers passwords and information in plain text. Anyone with a computer could have taken private customer information right off their phone.
If this all sounds too corporate and mainstream for you there is always the alternative Bitcoin. Bitcoin is an internet currency that is not linked to any country or bank. It is the self proclaimed first decentralized digital currency. The benefits of Bitcoin include:
1. Money is directly transferred between parties without going through a bank or clearing house
2. Fees are much lower
3.Accounts cannot be frozen
4. Bitcoin can be used in any country
5. There are no prerequisites
Bitcoins live in your digital wallet and making a transaction is as simple “as sending an email”.
It was started by an unknown individual under the pseudonymous name Satoshi Nakamoto. While its early days were marked by crime and drugs, most notably The Silkroad, today the currency is quickly gaining popularity. Recently Cameron and Tyler Winklevoss established a Bitcoin exchange fund that may soon be listed on the Nasdaq and the first Bitcoin ATM opened in Vancouver BC. Businesses are increasingly accepting Bitcoin but the currency is still very volatile.
To get started with Bitcoin one can buy Bitcoin using traditional money or it can be mined. To mine Bitcoin you run special software on your computer that solves math problems. In the early days of Bitcoin, mining was quite easy and anyone user could make a lot of money with a relatively simple computer. Now the equations are much harder to solve and cannot be done with a normal computer. To mine Bitcoins today you have a buy a special computer dedicated to the task and even then you will only be making factions of a Bitcoin with each solved equation. To better the odds of making money users have now formed mining pools that pool their computing power and split the coins earned.
Here is a great video that explores Bitcoin and one of the largest mining facilities in the country.
The future of Bitcoin and digital currency is a bit unclear right now with no clear standardized system. What is clear is that the way we engage with currency and make transactions is changing and may never go back.