Physical currency has been used for thousands of years, with Mobile Payments Today attributing the minting of the first coin to King Alyattes around 610 to 600 BCE. When you think about it, that means it's taken millennia for humans to come up with a more proficient way of paying for goods. The modern check didn't see use until the 17th century and it was only half a century ago when MasterCard and Visa began dropping plastic cards into the mailboxes of consumers to proliferate the use credit cards.
What this should illustrate is the fact that when it comes to paying for goods and services, many people are of the mindset that "if it isn't broken, don't fix it." To date, 7 billion people use physical currency to conduct 50 percent of transactions across the world. That's a 50 percent use rate for a methodology that is literally thousands of years old.
There is no arguing, however, that coins and bills aren't exactly without their flaws. People can lose their cash, it can be stolen or destroyed, it's often hard to count and record in large quantities and trying to pay with exact change can put a real slow on business operations. For many consumers, entrepreneurs, merchants and banks, the drawbacks of physical currency are readily apparent – the bigger issue is coming up with a new means of payment that can alleviate these issues without creating new ones.
The rise of the mobile wallet
For many people, mobile wallets and could be that new, innovative way of paying for goods and services. However, integration is a hurdle they are dealing with, both in terms of a hardware and software perspective. For example, Visa and MasterCard were able to bolster their customer bases by simply sending plastic payment cards to millions of people in the 1960s. These customers didn't have to take any initiative to gain access to these cards, they simply appeared in users' mailboxes.
When it comes to mobile payments, the answer is quite so apparent – it would cost a lot of money to simply drop smartphones into the hands of every potential consumer. That doesn't mean there aren't solutions to this unique challenge, however.
For many customers, mobile payments solutions offer a lot of value outside of simply paying for goods. For example, in Kenya, 96 percent of the banked population originally signed up for M-PESA, a mobile payment service, simply to send money home. However, after signing up, they discovered alternative uses for mobile payments they may have otherwise not known about if they hadn't taken that initial plunge.
Mobile consumer engagement can be greatly bolstered by incorporating payment options. Few modern brands create apps exclusively to transact payments – they also include other functionality, such as loyalty programs, review and research features and store locators. The goal is to get consumers interacting with brands via mobile payments, but keep them engaged with some of these other features.