The Death Of The Payment Card
Described with four moments of realisation
The cell phone is, in fact, a serial killer.
Cultural or mass behaviour change doesn’t happen overnight. The transition of settling almost every payment you make throughout the day with your plastic card to start forgetting that it exists will certainly take time. But how long? In this post I’m going to introduce four key moments which I think will describe how we gradually experience these changes, where mobile payments will eventually take over our regular use of plastic payment cards.
1 You realise that you always pay your friends with your mobile
The first step in the “mobile-killing-cards” transition is when mobile payments become the default way to pay your friends and other regular Joe’s. With mobile phones penetration above 90% and absolutely nobody carrying a wireless POS system it’s obvious that plastic will never solve these kind of transactions. In the Nordics, the specialised P2P payment applications from banks (such as Kass, Vipps & MobilePay) have achieved great success by becoming the standard platform to do P2P transactions. This moment of realisation has already been reached by the majority in the Nordic markets.
2 You forget your physical wallet at home but realise you’ll manage
So, you leave the house and suddenly you find out that you forgot your wallet at home. What to do? You’re already in the subway on your way to work (which you paid with your phone by the way) so you would prefer not having to go back. You convince yourself that everything will be OK, because your favourite pizza place accepts your bank’s mobile wallet payments. Also, if your co-workers want to go to another place they’ll take your share and you’ll split the cost with the app. No problem.
3 You start leaving your physical wallet at home to save some space
At this stage almost all of your regular expenses throughout the day can be paid with your favourite mobile wallet. You even get some awesome loyalty with each and every payment you make with your phone! It’s so much fun, you never know what to expect, sometimes you get free movie tickets or a free cup of coffee at your next return. It makes you wonder why you carry the physical wallet everywhere, you actually only use it from time to time. You start to leave it at home to save some space since you already got all your loyalty points and receipts in your mobile wallet app. You might grab it with you when you go abroad though, since you’re not familiar with the payment methods at your next destination.
4 Your payment card expires and you don’t even think about renewing it
Every merchants accepts your favourite mobile wallet or at least your second most favourite one. Paying small merchants on the streets will be no different than paying your friends with your phone. Buying online will be easier without cards, no more inserting long number-series and worrying about giving your payment details to everyone. The big merchants, such as your grocery store will only accept mobile payments, even with their own branded wallet, at the expenses of plastic cards for various reasons. First of all, it will be cheaper. Secondly, all receipts are digital resulting in better and easier accounting but above all – because the customer demands it. You suddenly realise that your, before beloved, payment card is expired, but you don’t even bother to renew it.
Person-to-Person is the key
Its important to build your mobile payment strategy on a solid Person-to-Person foundation as its the first key step in this unavoidable change. Casual payments, often with small amounts between friends, is what creates a mobile payment network to build on top of. With a strong P2P payment network, you’ll sooner than later reach the critical mass you need and the ball you’ve been pushing for a while finally starts rolling down the hill. Merchants, small and big, will compete to get access to this network.