Person paying with their smartphone

The payment technologies of the future… today

Today, we use copper coins and paper notes, but what will the money of tomorrow look like?

 

Computer keyboard button reading 'pay'

The rising popularity of smartphone payments and prevalence of electronic transactions has marked the decline of cash, which now makes up less than 50% of payments made in the UK.

But what is taking its place? Which payment methods are mere dreams of Tomorrow’s World enthusiasts, and which ones are actually on the horizon? Let’s take a look at some of the most exciting developments to see what is about to revolutionise the way we pay.

Wearable Tech

Person paying with smartwatch

Contactless cards have been around in the UK since 2008, with the EMV (Europay, MasterCard, and Visa) symbol now a staple part of our shopping experience. Using Near Field Communication, the card signals to a reader to charge up to a pre-specified value (currently £30 in the UK), and thanks to its popularity, it’s no longer limited to just cards.

Wearable technology is becoming smarter and more commonplace, and it’s now a method by which we can pay. Barclaycard – leader of the UK’s Contactless revolution – launched bPay in 2014: NFC-enabled devices that link to your card, allowing you to pay on-the-go.

To offer extra authentication when it comes to payment, the Apple Watch may utilise its heart rate monitoring software. Once it recognises your heartbeat, it will register when it’s being held by someone else, helping to prevent fraudulent activity on your account.

Having a range of contactless cards and wearable technology means we can leave bulky wallets and cumbersome coins at home. While it’s currently limited to £30, as security technology becomes more sophisticated, this will most likely change. It’s already increased from £20 in 2015, and that upward trajectory will likely continue as we learn more about wearable tech.

In the future, we may see the extension of the range of contactless items. Cars could be built with NFC software to facilitate payments at petrol stations or drive-throughs.

Digital Cards

Person using digital card to pay on tablet

Individual metal coins might be considered passé, but how about Coin? This digital card stores information from your various credit, debit, gift, and loyalty cards, allowing you to take them anywhere without the bulkiness of a full wallet or purse.

Most of us have myriad cards for various accounts and shops, but one digital wallet means you have them all to hand in one place. Both Android and Apple have also developed their own branded wallets for digital devices, allowing you to scan your cards and store information centrally.

Smart, eh?

Cryptocurrencies

Physical bitcoins on a black table

While other cryptocurrencies did exist before it, bitcoin is the first decentralised digital currency that most people have encountered. Introduced in 2008, it heralds a change in the way we trade.

bitcoin doesn’t use banks or financial ‘middle-men’ in the transfer of currency – it is open-source, and has minimal transaction fees.

Cryptocurrencies give people personal control over their money. If two people can transfer money digitally without the need of a centralised regulatory body, the use of paper and coin currency could decline alongside the cultural influence of banks.

Biometrics

People viewing fingerprint scan on tablet - paying with a fingerprint on a tablet

Biometrics in security and identification have long been the territory of science fiction and James Bond films, but it’s already becoming a reality.

Swedish start-up Quixter debuted its software at Lund University in 2014. Users punch in the last four numbers of their phone number before hovering their hand over a reader – this recognises the unique vein patterns in their hand and authorises a payment.

US payment operator Biyo has a similar system of vein recognition. This is more secure than fingerprints, as vein patterns can’t leave an imprint, reducing the already small risk of fraud.

The software tracks the blood flow around the veins in your palm, so only you can make payments using information about you that is stored in the database.

As for iris-scanning software, Japan’s on the case. Fujitsu launched the Arrows NX F-04G phone in 2015, which allows users to link their credit or debit card information to their iris scan, and simply stare into the camera to make a payment.

Forget cards and numbers – your whole body is becoming the new gateway to a purchase.

Microchip

Tiny microchip on the tip of a finger

The external signals of your body are all well and good, but why not go one step further and authorise payment based on something inside your body?

Back in Sweden, a Stockholm office block uses microchips to allow workers access to the building. Still a remarkably sci-fi-esque idea to many of us, this could well be the future of not just payment, but the storage of all personal information, from healthcare to career history.

Radio-frequency identification (RFID) chips will enable us to scan and purchase products without any coins, cards, or even wristbands – simply wave your microchipped hand over the reader to pay. Queues will become a thing of the past, along with all paper records, physical currency, banks, and even receipts.

What does this mean for businesses?

In order to retain a faithful customer base – and attract new consumers – businesses need to stay on top of payment trends.

Making as many payment methods available as possible will increase the number of people who are willing (and able) to spend with you. While you’re updating to contactless or retinal scanners, don’t forget to also accommodate for the people who are a little bit more reluctant to use the latest technology.

Our previous research found that Brits dread having their card declined (especially on dates and at the supermarket), and over a third of people have experienced it. While paying with cardsis extremely popular, cash is still the bread and butter of payment, and it may isolate the pro-cash population if we make the switch to being a wholly cashless society.

Visa and Mastercard have stated that all retailers will have to allow contactless payment by 2020, and as of January 2016 no payment terminals can be manufactured without contactless capabilities.

This means that retailers which have yet to join this financial revolution will find themselves required to within a few years. Enabling this technology sooner rather than later will prevent frustrating the tech-savvy consumer base that might not look kindly on having to remember their PIN or – heaven forbid – search their pockets for spare pennies and pounds.

Sainsbury’s continued reluctance to embrace contactless technology has seen significant backlash from customers, but in May 2016 it was announced that the change is imminently on the horizon for the supermarket giant.

Many big-name retailers (such as Tesco and M&S) have trialled contactless payment in London before rolling out across the whole country, which could have the adverse effect of exacerbating the financial divide between the capital and the rest of the UK.

As such, getting on board with new payment technologies is about more than just the profitability of a satisfied customer base. It has a socio-cultural effect that keeps the whole country moving forward together.

We’re all fascinated by the next-big-thing. How will things work in 20 years’ time? What technology will my children grow up with? Which innovative product will soon be regarded with the same nostalgic redundancy as the VCR?

When it comes to the way we pay, there are exciting technological developments making their way into the everyday, and soon we will struggle to remember how we coped without the band on our wrists, iris recognition on our phones, or even the chip within our palms.