Over the course of history, money has evolved several times. Early civilisations exchanged commodities and bartered for goods. Later, paper money and coins were introduced by governments as it was inconvenient and dangerous to carry around large, heavy pieces of gold to purchase things. With the introduction of debit and credit cards, we have been able rely less on cash. Now, we can use our bank cards to buy things online, at the grocery stores, even at McDonald's. Today we could be on the verge of another major monetary evolution - mobile phones.

 

Firstly, let’s take the time to define what mobile payments are. The term ‘Mobile payments’ refers to mobile money, mobile banking, mobile money transfers and mobile wallets. In other words, we are talking about using a mobile device to perform payments and financial services. This technology is not new, it has been around since 1997 when in Helsinki, Finland, a number of Coca-Cola vending machines were set-up to enable users to send an SMS payment to it. The machine instantly processed the payment and vended your beverage. In that same year, a banking institution in Finland, named Merita, used mobile phones to launch a new banking service, which became known as mobile banking. Fast-forward to today and most of us can not use our smart phones or any cell phone with a web browser to login to our bank accounts. From there you can pay bills, transfer money to another bank account - even buy stocks and mutual funds. However, our ability to use mobile devices to purchase things in brick and mortar stores is a long way from being fully developed. 

 

According to Juniper Research, global mobile payment transactions have totalled around USD 240 billion annually. This number is predicted to grow two to three times over the next five years. Right now, there are a number of major players in this market who are fighting for a dominant market share and trying to get their platforms widely adopted. 

 

The search giant launched its Google Wallet service on 19 September of last year. Their mobile payment system allows users to store their credit card information, loyalty cards, gift cards, as well as other things and to redeem promotional and loyalty points. Google Wallet uses NFC technology (Near Field Communication) to make fast and easy payments by simply tapping your mobile device on a PayPass-enabled checkout area. For additional security, once the device has tapped the checkout, you are required to enter a PIN code in order to activate the antenna of the NFC chip. At present there are only a handful of phones on the US service provider Sprint which support this service - including the Galaxy Nexus, Galaxy S III, Nexus 7, LG Viper 4G LTE, and the LG Optimus Elite. Google has stated that their system is quite open and will support non-android phones such as RIM, Apple, and Microsoft. Google doesn't charge merchants for access to Wallet. Their plan is to make money through sponsored ads to their users. At present, Google Wallet works with MasterCard PayPass and Visa Pay Wave locations. 

 

ISIS is a joint venture between AT&T, T-Mobile, and Verizon Wireless - three of the four major US mobile service providers, and will work on any of their phones that have NFC chips. The project was first announced on November 16, 2010. Like Google Wallet, ISIS uses NFC technology to store various types of card information and to make quick payments. Right now, ISIS is beginning to test its service in two pilot cities; Salt Lake City, Utah and Austin, Texas. Currently ISIS works with Visa, MasterCard, Discover and American-Express. 

 

During Apple's annual WWDC conference on 11 June, they announced their entrance into the mobile wallet market. However, Apple isn't jumping into the deep end yet. Their Passbook application, which will be available in the new iOS 6 update, will allow any retailer or third party developer to use Passbook in order to store coupons, movie tickets, airline boarding passes, loyalty and gift cards, etc in one place on the iPhone. It will also utilise time and location services so that relevant passes and cards will pop-up on the iPhone's home screen (i.e. you walk by a Starbucks and your unused gift card will alert you). When you are ready to use one of your passes or cards on Passbook, the application will produce a bar-code which can be scanned with current POS (point of sale) scanning systems. Perhaps in the future Apple will fully enter the mobile payments market. If Apple does want to do so, then it would make sense for them to use NFC technology, as opposed to creating a new technology and also having to worry about getting this technology in to the hands of retailers. 

 

Square was introduced in early 2010 and is an application and plug-in device for Apple products and Android mobile devices. The name 'Square' originates from the square shape of the plug-in device that allows you to securely swipe credit cards. It has become a major success, especially with small businesses, as it allows retailers to use cell phones and iPads as portable registers. Their success has spawned a number of copycats, but Square is still leading the pack in this area. Recently, they released a new mobile application called Pay with Square. This new program allows users to securely store their credit card details on their phone. When the customer goes into a store that uses Square's technology, they don't even need to take their phone out of their pocket. The register detects the customer's phone and the owner's account information populates the register screen. The clerk can confirm the person's identity by looking at the picture before processing the payment. Starbucks has just signed a deal with Square and will begin to use Square to process payments in nearly 7000 US locations. This could help to make Pay with Square an international success. 

 

NFC is a hot technology right now and is picking up steam around the globe. Google predicts that by 2014, 50% of all smart phones in the world will use NFC technology. Some analysts are predicting that by 2015, the value of all mobile money transactions will balloon up to USD 670 billion. At the same time, as NFC becomes more and more integrated into our lives, we will be able to use it for more than just making payments. 

 

As mentioned previously, NFC can also be used for reward and loyalty programs (no more thumbing through a stack of business cards) and it could be used as a boarding pass for planes, trains and other forms of transportation. Furthermore, NFC could be used for downloading data from NFC enabled tags or 'smart posters'. For example, you could be walking around a museum and want more information about the display you are looking at. So you tap your phone on a nearby NFC sticker which allows you to download information, audio, and images of this museum display. Another application of NFC is to interact with your smart home. You could potentially use your cell phone to open your front door and to control and lock the thermostat so that the kids don't keep changing the temperature! Finally, NFC could have a major impact on mobile gaming. The uber popular Angry Birds franchise has already released a new game called Angry Birds Magic, exclusively for Nokia phones. The game allows its users to tap certain NFC enabled products (such as an Angry Birds plush toy) or two NFC enabled phones together in order to unlock new levels, characters, and other content. NFC could have a huge impact on our lives in the near future. But ultimately, the success of this technology hinges on whether or not people will adapt it to make mobile payments.