A decade or so ago, checks and cash payments were the standards, which then got replaced by wire transfers and money orders. But in this day and age, new payment technology such as mobile payment solutions and peer-to-peer digital cash are driving “inevitable” change in the payments industry, according to a new report from Payments UK.
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Traditional vs. New Breed of Finance
Paying for goods and services today is vastly different compared to a handful of years ago. After nearly six decades of no real innovation in the world of finance, various forms of alternative payments have popped up since 2008. The struggle between established financial means and new breeds of payments is in full effect, and the tide is slowly changing in favor of the latter.
One of the more prominent new forms of payments is a credit or debit card. Even though this payment tool has been around for several decades, it has taken consumers quite some time to get used to the concept of plastic cards. Today, there are a ton of places where credit and debit cards are still not accepted, although they can be used to pay online for just about anything.
There is a certain growth in the credit card sector, as the number of cards in circulation has increased by 11% from 2013 to 2014. However, there are notable differences in the uptake of this payment method between different countries. In the United Kingdom, for example, debit cards are far more popular than credit cards, according to a new Payments UK report. A similar trend can be found in countries such as Japan, and The Netherlands. In the United States, on the other hand, there are three times as many credit cards per capita compared to debit cards.
Even credit cards have undergone some form of innovation in recent years, as most of them have been embedded with a particular chip, which allows for contactless payments. Strangely enough, the United States are well behind the rest of the world regarding issuing contactless payment credit cards. However, they did rank in the top five of contactless payment thresholds in US dollar equivalent throughout 2013.
“The increase in POS terminals also suggests that retailers of all sizes are increasingly willing to accept card payments, regardless of the value of the payment,” the report reads. “The falling average transaction value of debit card payments in the UK suggests that these cards are increasingly being used to make low-value transactions that previously may have been more likely to be made using cash.”
Some people wonder what might be happening to cash payments, as several banks and countries are looking to go cashless in the future. There does not seem to be any reason to worry just yet, as more cash machines are installed in most countries than ever before, and consumers appear to make regular use of these ATMs as well.
Mobile payments seem to be a hot market right now, but it will take a few more years until mainstream consumers will start using them. At the time of publication, the report indicated there are three main trends in the mobile payment industry:
- Contactless payments
- Peer-to-peer payments
Revamping P2P Payment with Bitcoin
Despite all of these new payment methods, they still lack transparency. Consumers around the world are becoming more aware of how the payment industry works, and how little they can see of what goes on behind the scenes. Even though it is their money that is being moved around, once it leaves their bank account or credit card, there is no way of tracking the money.
Keeping in mind how mobile peer-to-peer payments are gaining in popularity, it is important to remember how there is no global solution in traditional finance. Every form of mobile payments offers limited availability, which seems to be driving the “inevitable” revolution in payments. The report reads:
Once a quiet corner of the financial world, the payments industry is transforming like never before. Technological advances, new players to the market, fresh regulation coupled with UK customers’ appetite for more convenient and improved services mean that change is inevitable.
Although it doesn’t mention it specifically, one such innovative payment method driving innovation in the space is Bitcoin. The modern digital currency provides peer-to-peer payment capabilities and works on a global scale.
Furthermore, Bitcoin users can send and receive funds from any sort of device they want, removing the need for physical wallets. Plastic cards are also covered as hybrid solutions such as Bitcoin debit cards are available to consumers all over the world as well. Companies such as E-Coin, Bit-X, and Xapo have been offering debit cards to digital currency users for a while now. These card make it easier for consumers to get acquainted and spend bitcoin anywhere regular credit and debit cards are accepted.
Source: Payments UK
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