The world spins, things change and we should embrace the change as long as it’s beneficial for society as a whole. Nothing is spinning faster than the payments business, and I believe we are in the midst of the the greatest transition the world has seen in how we pay for the things we buy. What’s more, the entire world is part of this experience and just about everyone in the developed world will be touched by this (r)evolution.
The way we pay and receive payments is moving, slowly but inexorably, to “Digital Wallets”. Over the course of history, there have been different methods of how people pay and receive currency, i.e. money.
The progression of payments history looks something like this:
- Livestock (9000-6000 BC)
- The Shekel (3000 BC)
- Shell Money (1200 BC)
- Crude Metal Coins (1000-600 BC)
- Precious Metals (700 BC)
- Leather Money (118 BC)
- Paper Money (806)
- Wampum (1535)
- Gold (1816)
- Gold backed U.S. Dollar (1913)
- Charge Cards (1920’s)
- Credit Cards (1950)
- US Dollar (1971)
- Online Shopping (1994)
- Mobile Payments (1997-present)
Humans have proven to be adaptable to change in many circumstances and the younger generation – Millennials in particular – are adopting Digital Wallets. The fact that this generation is fully conversant with technology and seems to never put down their mobile device is partly the reason for the coming acceptance of mobile wallets. The penetration of smartphones has crossed the 50% line in the US population and continues to grow.
Surprisingly, we have to stop short of generalizing that all Millennials will rush to turn their handsets into wallets. Recent research has shown that many in Generation Y are wary of ditching their physical wallets and depending on what they might perceive to be an intangible virtual currency.
The central issue for Millennials and other digitally enabled consumers who behave like their younger Millennial friends is trust. The winners in the digital wallet fight will be the companies which earn merchant and consumer trust first and can show value in moving away from traditional currencies.
Can digital wallets really prove functional and practical while seamlessly providing a safe environment for all users? That is the question that has attracted lots of investment and the first to deliver the right answers to consumers will be big winners in the digital wallet competition.