Using smartphones to make financial transactions will seem like a normal part of everyday life by 2020, new research suggests.

Pew Research Center Study released its study data April 17.

For the report “The Future of Money: Smartphone swiping in the mobile age,” Pew researchers put two scenarios before 1,021 experts and asked them to agree with one or the other, and provide explanation to allow for partial agreement and gray areas. They conducted the research from Aug. 28 to Oct. 31 last year.

Sixty-five percent of participants agreed that by 2020 most Americans will trust smartphones and tablets to handle payment transactions online and in stores and that “cash and credit cards will have mostly disappeared from many of the transactions that occur in advanced countries.”

One analyst calls Pew’s estimate conservative. Indeed, the transition could occur sooner, Gil Luria, managing director of equity research for computer services and financial technology for Wedbush Securities, tells ISO&Agent Weekly.

“I think in a five-year timeframe we’re going to have a very large part of the population adopt this type of payment, at least partially,” he says.

Storing features in a smartphone’s digital-wallet, including credit cards, loyalty schemes and coupon information, seems too compelling for consumers to ignore, Luria says.

Google Inc., Isis, PayPal Inc. and Visa Inc. all have or are working on wallet platforms, and the Pew study cites analyst speculation that Apple Inc. will launch one as well.

So far, mobile-wallet adoption seems slow because of the many partners necessary to make wallets work–banks, card companies and mobile carriers, for instance, Luria says. PayPal has an advantage in that regard because it operates a “closed system,” he says.

“PayPal has customer relations, it has merchant relationships, it has a network, and so it doesn’t need to coordinate as many different parties,” Luria says. “It doesn’t need to rely on a specific technology (and) doesn’t need to tie itself to one carrier.”

Smartphones offer robust payment security, with at least two ways to authenticate payments, Luria says. Location-based services and encryption technology also will boost security, he says.

“There’ll be a transition period where there’ll be a cat-and-mouse game where the crooks figure something out and the loopholes will be closed,” he says. “But if everybody gets through that transition period without losing customer confidence and merchant confidence, it will lead to far more secure transactions.”

Security with mobile payments is assumed, says Rick Oglesby, group senior analyst at Aite, tells ISO&Agent Weekly. No developer would go to market without it, so its strength is not a factor in consumer adoption of mobile payments, he says.

Adoption depends on the utility, Oglesby says. “Consumers don’t usually adopt payment products or services because they need a new one, at least not in droves,” Oglesby says. “They adopt new products and are more than happy to use whatever payment vehicles can enable them to buy those new products.”

PayPal didn’t become successful because it had a great payment scheme; it became successful because it was an enabler of eBay payments. Consumers were looking to use eBay, and PayPal was a way to do it, Oglesby says.

Oglesby doesn’t see widespread adoption occurring as quickly as Luria does, and he doesn’t see card payments becoming obsolete by 2020.

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