Right from the early stages of civilization, ways of charging people in exchange for services or goods have been evolving. Initially, the barter system was used as a payment system. The evolution of payment methods throughout the history of mankind can be represented as:
Barter system → Coins → Currency Notes → Credit/ Debit Cards
Card payments have been prevalent for more than years now. But with the speedily evolving mobile wallet concept, cards would soon be a talk of the past. Though there are several security concerns that are raised by users for mobile wallets, our web application development experts are pretty optimistic about its onset. According to our study, mobile wallets seem to be the one that would succeed plastic currency.
“Several users are sceptical about the security of mobile wallets, but that was the same when the credit/debit cards were introduced. People tend to be slower in adapting to changes in payment systems than their adaption rate to technological advancements.” say our mobile application specialists while studying the market trends of smartphone payment methods.
The rolling out of Android Pay by Google and then Apple following the lead by launching Apple Pay marked the start of the era of mobile wallet trends. With so many businesses already including outsourcing mobile application development in their expense planning for the year 2018, it has become necessary for everyone to know the journey of how mobile wallets evolved.
Mobile Wallets - The Evolution
Phase - 1: The Inception
The idea of mobile payments was first implemented through text messaging. This was first used by some Coca-Cola vending machines in 1997. The customer could send a text message to the vending machine to set up the payment and then vend the product. This slowly evolved and then there were many services which were provided through text messaging and the amount was then included in the bill of the mobile carrier service that the customer used.
The idea of mobile payments was first implemented through text messaging. This was first used by some Coca-Cola vending machines in 1997. The customer could send a text message to the vending machine to set up the payment and then vend the product. This slowly evolved and then there were many services which were provided through text messaging and the amount was then included in the bill of the mobile carrier service that the customer used.
Phase - 2: The Exploration
Once the mobile wallet concept gained momentum, several start-ups realised the true value of the idea and started working on the idea of going cashless. Several large companies took up the challenge of exploring various strategies that would drive customer adoption. QR codes helped improve the functionality of the primitive mobile wallets.
Phase - 3: The Increasing Popularity
Once the Google Wallet, PayPal, and ISIS were launched, the mobile wallet started getting slowly accepted by people. Several high-scale merchants like Wal-Mart, Kohl’s, etc. took up the initiative and launched their own wallets. Then, after NFC was integrated into m-wallets and that interested mobile application development specialists even more. Within that period, Bitcoin, a cryptocurrency which was created in 2009 by an unknown person gained popularity and the idea of blockchain was accepted worldwide.
Phase - 4: Present Scenario:
At present, Near Field Communication (NFC) has been completely integrated into apps like Samsung Pay, Google Pay and Apple Pay, payments have made contactless payment methods quite popular. Though these apps are still in implementation mode in several countries, they have been successfully implemented and well-received in the USA, China, and the UK.
At present, Near Field Communication (NFC) has been completely integrated into apps like Samsung Pay, Google Pay and Apple Pay, payments have made contactless payment methods quite popular. Though these apps are still in implementation mode in several countries, they have been successfully implemented and well-received in the USA, China, and the UK.
The complete journey of the mobile wallet concept can help one to clearly see the influence it would have on future payment methods. Basically, there are 3 types of mobile wallets that enable quick payments directly through smartphones. The classification will help business owners decide the type of mobile wallet they need to integrate into their mobile application development plans.
Here is how all mobile wallets are classified:
Example: Google Pay, m-pesa developed by Vodafone in partnership with ICICI Bank, etc.
2. Closed Payment: This is a payment system generally used by eCommerce companies or business set-ups where some amount of money is locked into the eCommerce application. These kinds of wallets have to be used specifically for the web application where the purchase has to be made. In case of cancellation of the purchase or return, the refund amount is either locked with the merchant in the form of a gift card or the refund is processed into your bank account through net banking. There are no options provided for cash withdrawals, third party payments, or settlements.
Example: Most eCommerce websites like Amazon, Flipkart, Wal-Mart, etc.
3. Semi-closed Payment: The structure of semi-closed payment wallet is somewhat similar to the closed payment wallet. It also does not permit cash withdrawal or redemption. The only difference is that it permits the user to buy products from merchants that have tied up with the app for business and also transfer money to the app users within the app.
Example: Most eCommerce websites like Amazon, Flipkart, Wal-Mart, etc.
3. Semi-closed Payment: The structure of semi-closed payment wallet is somewhat similar to the closed payment wallet. It also does not permit cash withdrawal or redemption. The only difference is that it permits the user to buy products from merchants that have tied up with the app for business and also transfer money to the app users within the app.
Example: Paytm, PayPal, freecharge, etc.
All these wallet types are being constantly improvised. Most of the wallets are not yet internationally available. But, constant efforts are being made by mobile app development specialists to expand the horizons of all these apps. Recently, Google launched an app named Tez in partnership with the Axis Bank that enabled UPI payments that enabled money transfer directly into bank accounts.
Conclusion:
The concept of the mobile wallet is still in its development mode. But the future of mobile application development is sure to see a huge impact of mobile wallets and contactless payments over it. Some technology experts predict that with the popularity of cryptocurrency and several banks planning to adopt the blockchain system in offering their banking services, mobile wallets will gain a speedy popularity and soon will become a necessity. Some experts even predict the extinction of physical wallets within a decade or two.
