In the last couple of years many new payment mechanisms have come into existence. Even though traditional payment services like credit cards and PayPal still dominate the market — both offline and online — newer payment mechanisms like Apple Pay and Android Pay are becoming increasingly popular.
With leading brands like Starbucks, Subway, Staples and others embracing these novel payment methods, it’s only a matter of time before you can walk into the corner store, scan your fingerprint, and walk out with a loaf of bread. Here’s a look at five payment mechanisms to watch out for:
1. Mobile wallets: In case you haven’t used it yourself, you’ve likely not missed those logos of PayPal gracing the websites of nearly every e-commerce site. PayPal is one of the oldest and most successful digital wallets in existence today. Just as a digital wallet like PayPal holds money in an online account to be used for making payments across a variety of platforms, mobile wallets too perform an identical function housed inside a smartphone.
Apple Pay is Apple’s foray into the mobile wallet space that Google first entered in 2011. In the months since its launch, Apple Pay has become the fastest-growing mobile payment mechanism ever. Google’s recent deal with Softcard that offers Android phones being shipped from T-Mobile, Verizon and AT&T pre-installed with the Google Wallet is sure to spur further growth of mobile wallets in the months ahead.
The reasons for the popularity of mobile wallets are manifold. With the leading smartphone makers now offering mobile payments using near-field communications (NFC) technology, point-of-sale (POS) systems at retail establishments as well checkout forms online have kept pace with the changes. Paying with a mobile wallet means the customer doesn’t need to share their personal data or bank account details to complete a transaction. The fact that the payment can only be made after a second level of authentication (e.g., with a PIN number or a fingerprint scan) makes their use even more secure from hackers.
2. QR codes: Quick Response codes or QR codes have had their 15 minutes of fame, with marketers using them as handy contest tools, mobile app download systems or even coupon delivery mechanisms. However, these straightforward uses of QR codes touch but a fraction of the real potential that these humble codes hold.
QR codes are complex enough to stand in for an entire POS system. At the same time, they’re simple enough to allow users to make payments by simply scanning a QR code with a specially designed app, such as SnapScan. Here’s how it works: Each vendor receives a unique QR code from SnapScan. To make a payment, the customer has to already have SnapScan installed on their smartphone and linked the app to their bank account. By scanning the retailer’s unique QR code with their phone, the user can swiftly transfer funds from their account to the retailer’s account. There’s no need for expensive POS systems on the retailer’s end. Similarly, the user is saved the trouble of typing in all their payment details online or swiping their credit card on a POS machine that may or may not be 100 percent secure.
3. Bitcoins: The first brush with worldwide fame (or notoriety, depending on the way you look at it) that Bitcoin had was with the emergence of the erstwhile Silk Road as a grey market for contraband items. Bitcoins were a relatively new, fully digital and totally untraceable currency cum payment mechanism that granted the patrons of sites like Silk Road the anonymity they desperately sought.
Mining bitcoins was a complicated and laborious process. Not many vendors accepted payments via Bitcoin and getting a fair rate for bitcoins online depended largely on your luck and negotiation skills. In short, bitcoins had become the leading stealth payment option among tech nerds and online delinquents alike.
Rohan Ayyar is the regional marketing manager for India at SEMrush. His blog, The Marketing Mashup, covers digital marketing from the perspective of B2B, B2C, lead generation, mobile marketing, SEO, social media, content marketing, database marketing including predictive analytics, and conversion rate optimization. In addition, he'll look at emerging marketing technology and how marketers can use it. Reach Ayyar at firstname.lastname@example.org.