Tuesday, September 20, 2011

Another Example of Our Move to a Cashless Society

We are living in an almost cashless society. We saw a lot of news and hype around this week around the Goggle Wallet, which is a good start but far too limiting in the amount of phones that can offer this service. The Google Wallet service also needs more merchant and brand support to make a mainstream impact.

How does functionality get imbedded into mainstream phones?

It has traditionally been with attachments like a camera or a QWERTY keypad hooked into a phone. These capabilities get popular and are then embedded in the phone to increase the phone attractiveness. Well, there is another example of an attachment that is gaining popularity, the Square mobile payment attachment which is on sale at Best Buy for $9.99. It has risen in popularity among college students who primarily use credit or debit cards. They use it when they want to transfer money to share costs. They do not carry cash so they split the bill using a credit or debit card. This functionality adds value because it ensures the college student gets paid, which is very important when money is tight. Having this capability imbedded in a phone will make phones more popular among the teenagers and 20’s age group. These are a primary group of smartphone purchasers.

If it is valuable enough for one group and there is a low barrier to using the service, other groups will find a way to adopt it if there is value, like Facebook. Peer to peer transactional changes are occurring because we are moving to a cashless society, and the phone can make these transactions easier. My grocery store clerk tells me 90% of all of her grocery transactions are with a credit or debit card. The phone will win out as the primary payment device because of its flexibility in making and receiving payments, ability to record transactions and control payments, and the capability to incentivize shoppers via personalized coupons.

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