What is<\/i> your wallet? Mobile devices represent the future of money.<\/b> <\/p>\n\n
Tech experts say payment with mobile devices and cloud storage of financial information could be commonplace by 2020\u2014although a number of potential hurdles and holdouts stand in the way<\/b> <\/p>\n\n
Within the next decade, smart-device swiping will have gained mainstream acceptance as a method of payment and could largely replace cash and credit cards for most online and in-store purchases by smartphone and tablet owners, according to a new survey of technology experts and stakeholders.<\/p>\n\n
Many of the people surveyed by Elon University\u2019s Imagining the Internet Center and the Pew Research Center\u2019s Internet & American Life Project said that the security, convenience and other benefits of \u201cmobile wallet\u201d systems will lead to widespread adoption of these technologies for everyday purchases by 2020. Others\u2014including some who are generally positive about the future of mobile payments\u2014expect this process to unfold relatively slowly due to a combination of privacy fears, a desire for anonymous payments, demographic inertia, a lack of infrastructure to support widespread adoption, and resistance from those<\/a> with a financial stake in the existing payment structure.<\/p>\n\n These findings come from an opt-in, online survey of a diverse but non-random sample of 1,021 technology stakeholders and critics.\u00a0 They were asked to choose one of two provided scenarios and explain their choice. \u00a0<\/b><\/p>\n\n 65% agreed with the statement:<\/b> <\/p>\n\n \u201cBy 2020, most people will have embraced and fully adopted the use of smart-device swiping for purchases they make, nearly eliminating the need for cash or credit cards. People will come to trust and rely on personal hardware and software for handling monetary transactions over the Internet and in stores. Cash and credit cards will have mostly disappeared from many of the transactions that occur in advanced countries<\/i> .”<\/i> <\/p>\n\n 33% agreed with the opposite statement, which posited:<\/b> <\/p>\n\n \u201cPeople will not trust the use of near-field communications devices and there will not be major conversion of money to an all-digital-all-the-time format. By 2020, payments through the use of mobile devices will not have gained a lot of traction as a method for transactions. The security implications raise too many concerns among consumers about the safety of their money. And people are resistant to letting technology companies learn even more about their personal purchasing habits. Cash and credit cards will still be the dominant method of carrying out transactions in advanced countries.\u201d<\/i> <\/p>\n\n While 65% of the survey respondents agreed with the statement that smart-device swiping will predominate by 2020, relatively few who chose that view expect other forms of payment (such as cash or credit cards) to disappear entirely. Similarly, a number of participants argued that mobile devices and cloud storage represent the future of money, but that this evolution is likely to be ongoing\u2014rather than fully completed\u2014by the year 2020. <\/p>\n\n Those who chose the optimistic scenario pointed out that mobile payments are already commonplace in many parts of the world today, and that money has already been largely digitized in the modern economy. Mobile payments build on this ongoing digitization, but with an additional layer of security and convenience for users. Indeed, a number of experts argued that mobile payments do more than simply replace existing payment mechanisms\u2014they offer consumers new ways to monitor and gain value from their purchasing habits, and even open up the potential for entirely new forms of currency.<\/p>\n\n \u201cFor many of these experts, \u2018mobile money\u2019 represents more than just existing processes adapted to a new, more portable form factor,\u201d said Janna Anderson, director of Elon\u2019s Imagining the Internet Center and a co-author of the study. \u201cThey see this as an opportunity to implement security measures that are lacking in our current financial systems, to offer consumers more control over their spending, and to even reinvent the way we think about the concept of \u2018money\u2019. Top people from Microsoft, Nokia and Netflix were among the many who said it is up to those who control transaction systems to set the timetable for adoption\u201d<\/p>\n\n Although most of the experts surveyed expect mobile payments to play a prominent role by the year 2020, many envision mobile wallets supplementing\u2014rather than fully replacing\u2014more traditional forms of payment. Some expect this change to evolve along generational or socio-economic lines, with younger and more well-off consumers flocking to the convenience of mobile payments while others stick with tried-and-true methods. Others predict that privacy or security concerns (i.e., a fear of storing all of one\u2019s sensitive information digitally in the cloud where it can be stolen or used for marketing purposes) as well as a desire for anonymity when making sensitive purchases will ensure that cash maintains a foothold in the consumer economy for the foreseeable future. And still others predict that the financial services industry will delay any wholesale migration from their lucrative business in debit and credit card transactions.<\/p>\n\n \u201cDue to concerns about the technology, resistance by incumbent providers and the generally slow nature of societal change, there is a fairly consistent feeling among these experts that mobile payments will exist on a spectrum along with a number of other financial options,\u201d said Aaron Smith, a Senior Research Specialist at the Pew Internet Project and a co-author of the study. \u201cIndeed, some expect these services to most quickly reach widespread adoption in the developing world, due to its lack of an incumbent banking sector and ingrained consumer habits.\u201d<\/p>\n\n This is third report generated out of the results of a Web-based survey that gathered opinions on eight Internet issues from a select group of experts and the highly engaged Internet public. (Details can be found here: <\/i>http:\/\/www.elon.edu\/e-web\/predictions\/expertsurveys\/<\/i><\/a>)<\/i><\/p>\n\n Following is a selection of respondents\u2019 remarks:<\/p>\n\n \u201cThere is nothing more imaginary than a monetary system\u2026Of course we’ll move to even more abstract representations of value. Other countries are already content to use their phones; we’ll catch up eventually.\u201d \u2013Susan Crawford<\/b>, professor at Harvard\u2019s Kennedy School of Government<\/p>\n\n \u201cThe 2020 date might be a bit optimistic, but I’m sure that this will happen. What is in your wallet now? Identification, payment, and personal items. All this will easily fit in your mobile device and will inevitably do so.\u201d \u2013Hal Varian<\/b>, chief economist at Google<\/p>\n\n \u201cThe introduction of cryptographic protection to the instruments such as credit cards that we carry around with us is necessary and inevitable.\u201d \u2013Peter J. McCann<\/b>, senior staff engineer for Futurewei Technologies<\/p>\n\n \u201cI for one welcome my beast-marked future financial transactions. Just look into my eye\u2013biometrically of course\u2014and add to my e-wallet,\u201d \u2013Paul Jones<\/b>, associate professor at the University of North Carolina-Chapel Hill<\/p>\n\n \u201cWe have already witnessed the transition from cash to debit\/credit cards. The electronic wallet is not much more than a \u2018virtual card,\u2019 in which near-field wireless communication replaces the reading of a magnetic stripe.\u201d \u2013Christian Huitema<\/b>, Microsoft distinguished engineer<\/p>\n\n \u201cI see \u2018credit cards\u2019 as already virtualized, electronic currency. The form factor and functionality of the card doesn’t really matter: I’m already making an electronic transaction and I expect all the affordances of such.\u201d \u2013Peter Pinch<\/b>, director of technology at WGBH<\/p>\n\n \u201cI expect this transition to happen even more quickly that by 2020. These systems are already the norm in other countries such as Japan.\u201d \u2013Suzanne England<\/b>, professor of social work at New York University<\/p>\n\n \u201cThe driver here will virtually 100% be whether or not the credit card industry decides it can make more money through changing technologies.\u201d \u2013Jonathan Grudin<\/b>, principal researcher at Microsoft:<\/p>\n\n \u201cI don’t think it will be security concerns that will stall the adoption of NFC so much as the effort involved with getting the infrastructure for its use in place on a national scale in the United States.\u201d \u2013Steve Jones<\/b>, professor of communication at the University of Illinois-Chicago<\/p>\n\n \u201cCash\u2014tangible, hold it in your hand dollars\u2014has been around for millennia. It won’t go away in a decade.\u201d \u2013Jeff Eisenach<\/b>, principal at Navigant Economics LLC<\/p>\n\n \u201cThe majority of working class and lower-middle class people in advanced countries will not be passionate about the issue in either way but will still be extremely slow to adopt any of these systems. In many of the communities that I visit, using ATMs is still a radical thing done by the young.\u201d \u2013danah boyd<\/b>, Microsoft Research leader<\/p>\n\n \u201cThere will be a need for people to have an \u2018anonymous\u2019 wallet that can be used for payments that are not traced to them personally.\u201d \u2013Bruce Nordman<\/b>, research scientist at Lawrence Berkeley National Laboratory<\/p>\n\n \u201cWhen credit cards arrived, checks did not disappear, and neither did money. Although in some places either cash or cards are accepted, there are three main methods of payment. If another method of payment is added, we will likely have four methods of payment and retailers and businesses must accept another form of payment.\u201d \u2013Amber Case<\/b>, CEO of Geoloqi<\/p>\n\n \u201cNot only will our notion of currency change as it becomes electronic and (even more) virtual, but I see the possibility for new currencies measuring new value. We could, for example, award and trade in points for responsible environmental behavior. I also see the possibility to create new currencies that cut across national borders, independent of governments.\u201d \u2013Jeff Jarvis<\/b>, author of What Would Google Do?<\/i><\/p>\n\n Respondents were allowed to keep their remarks anonymous if they chose to do so. Following are predictive statements selected from the hundreds of anonymous comments from survey participants:<\/b> <\/p>\n\n \u201cWhat cash? Already, myself and peers in the NYC area rarely use cash. We write less than five paper checks per year. Virtually everything we spend is done electronically.\u201d<\/p>\n\n \u201cThis is a tough one, but it seems that convenience and a guarantee of privacy and security is enough for most people. We went from holding our own money, to trusting banks, to trusting credit card companies\u2014an even more convenient way to spend will be welcomed.\u201d\u00a0\u00a0 <\/p>\n\n \u201cIt won’t happen this quickly less because of security fears but more because of the cost of mass adoption of these technologies. It needs to reach a tipping point where most vendors run this way, and I just think it will be cost prohibitive for a while.\u201d<\/p>\n\n \u201cThis shift shall also take longer than expected. Other than security and privacy issues, more prosaic problems such as costs or other hindrances\u2014e.g. if you run out of batteries, you temporarily run out of money\u2014may arise.\u201d<\/p>\n\n \u201cWe’ll get there, but in 2030 rather than 2020. It just takes time for the whole system\u2014from hardware to habit\u2014to shift. Look at how long checkbooks have hung around, and nobody has ever really liked them.\u201d <\/p>\n\n \u201cMobile money is coming; it is just coming slowly in developed countries (like the United States) where there are so many entrenched options to do payments and banking.\u201d\u00a0\u00a0 <\/p>\n\n \u201cAs much as I’d like to see a money-free world, I’m afraid the opportunities for the hackers and pirates are too great. I’m happy to buy my $2 Starbucks using my Android but I don’t know that we will ever feel secure enough to make much larger purchases that way.\u201d\u00a0\u00a0 <\/p>\n\n \u201cMuch like the personal check, cash, and credit cards will take much more time to be fully eliminated. The elderly and lower income groups will take more time to adopt these new technologies, making it critical for businesses and services to maintain the cash\/credit card option.\u201d\u00a0\u00a0 <\/p>\n\n \u201cSimply as a demographic matter, people used to using paper money and credit cards will not abandon them within the next decade. Cultural changes don’t happen as quickly as forecasted in many of these scenarios. Changes in values, practices, and social institutions occur gradually over generations.\u201d\u00a0\u00a0 <\/p>\n\n \u201cI don’t think everyone is going to go fully with smart devices. I’ve had my credit card number stolen three times in my life\u2014all from online purchases at different, yet credible, online vendors. I do not trust everything going through the Internet. I am sure that for people that have had their identity stolen, they would want to use cash more than credit cards.\u201d\u00a0\u00a0 <\/p>\n\n \u201cNFC will be \u2018embraced\u2019 for \u2018small\u2019 transactions. I suspect large transactions, such as purchases of home or cars, will be much more traditional, but that people will rapidly adopt NFC and its successors for coffee, fast food, and other \u2018small\u2019 transactions.\u201d\u00a0\u00a0 <\/p>\n\n \u201cCash survived checks and credit cards and I think it will also survive NFC payments. It’s also unlikely that credit cards, per se, will disappear any time soon if for no other reason than many NFC payments will still be made using these very accounts. What is, perhaps, more likely, is that NFC will begin to displace credit card swipes among younger individuals for those sales made in person.\u201d\u00a0\u00a0 <\/p>\n\n \u201cThere will always be the need for some cash in the economy\u2014not everybody wants his or her transactions and earnings to be fully traceable. But I think that the people comfortable with using credit cards will be comfortable using smart-devices for the same things.\u201d<\/p>\n\n \u201cLike media, new forms do not \u2018eliminate\u2019 old forms, but they may overshadow them. Metal coins still exist; paper money still exists; paper checks still exist; credit cards still exist; debit cards still exist. All existing forms will play some role, with new forms (with privacy and security concerns) playing their biggest role in transactions that are a) small (coffee, parking spaces, magazines) and b) not seen as all that revealing. Transactions that are large (house purchase, car purchase, appliance purchase) or deemed sensitive (medical, disfavored\u2014tobacco, alcohol, sexual materials) will rely more on more well-known forms.\u201d\u00a0\u00a0 <\/p>\n\n The Imagining the Internet Center<\/b> (http:\/\/www.imaginingtheInternet.org<\/a>) is an initiative of Elon University’s School of Communications. The center’s research holds a mirror to humanity’s use of communications technologies, informs policy development, exposes potential futures and provides a historic record. <\/p>\n\n