While mobile wallet providers try to simplify payments by taking plastic cards out of the equation, others are looking further into the future to an era where everything is connected.
The Internet of Things, where most electronic devices are built with an Internet connection, could make payments seamless and invisible.
In the payment space, if the consumer has to think about the technology, youre already off track a bit, says Mickey Ristroph, CEO of Mutual Mobile, a group of designers and engineers that help companies create products with emerging technology. Consumers engage in so many payments per day the technology that enables consumers to not think about [the payment] is the one that will be most successful, Ristroph says.
Not only will these payments products shave off time when checking out, but will also decrease the instances of fraud, Ristroph says.
Mutual Mobile has worked with Isis, a mobile wallet venture from AT&T, Verizon and T-Mobile, for about a year and a half making the 2.0 iteration of the wallet more attractive for merchants and consumers.
The company also works with Phillips, a home healthcare provider, and Escort Radar, which builds radar detectors for automobiles.
Mutual Mobile has built companion apps for some Phillips medical devices, including a mobile app that enables consumers to control and configure their sleep apnea machines.
With Escort Radar, Mutual Mobile created an app that connects via Bluetooth with a users radar detector in a car. The app alerts the user to exactly what the radar is detecting. Plus every radar detectors data is synced to the cloud and can be transferred across the cellular network, enabling app users to see data from millions of radar detectors even if they dont personally own one, says Ristroph.
While those two examples highlight the advantages of connected devices, they also parallel some of the more worrisome threats the Internet of Things could present.
The Internet of Things could be complete chaos if we dont d enhance security, says Dave Birch, a payments expert and global ambassador at Consult Hyperion. All security is rubbish working off [consumer-generated] passwords, he says.
Hacking into a social media account might seem annoying when fraudsters send spam email or statuses, but Birch says consequences of hacks could become far more serious as more devices join the internet. For example, a fraudster could injure someone by hacking into a pacemaker or a car.
There needs to be some more concerted thought about what the security infrastructure should look like and how it will interact, says Birch.
Locking one user to one thing with an encrypted password could mitigate fraud, but with the automobile example multiple people usually share one car so a system for giving and revoking access to other parties would be needed, Birch says.
Traditional payments companies and banks could step in to protect consumers data. I might well trust banks to manage some of this stuff for me, Birch says. They seem to have some of the infrastructure already.
Banks deep knowledge of consumer identity could be applied to other situations that require authentication.
Is it a plausible service for my bank to run my house for me and if my neighbor needs to get into my house for some reason the bank would talk to my neighbors bank and give him permission to go through the door, Birch says.
Devices such as thermostats and door locks are already built with internet connections, but a fully connected home will take longer to create, says Ryan Martin, an associate analyst at the Yankee Group.
A short-term use case for internet-connected devices is the data it provides for targeting ads and offers, Martin says.
A card issuer or merchant who only has data from a consumers mobile device might leverage its location data to send a coupon to the closest restaurant. But if the provider also had data from social media plus access to information from a connected car, it would know that the consumer is driving to another town to celebrate a birthday. The provider could then send offers based on the consumers destination instead of the consumers current location, Martin says.
There will be more emphasis on digital signage in the next couple years so youre walking by a sign and it changes tailored to the specific person, says Martin.
Digital signs would use beacon technology that gathers data from a users mobile device using a Bluetooth connection, Martin says. It has a creepy effect but thats something that will fade as it becomes more prevalent, he says.
Mutual Mobile also has ideas about how to leverage beacons to change the fundamental revenue model and how businesses can offer services, says Ristroph.
A use-based commerce model could take over with service providers such as gyms, Ristroph says. Instead of charging a monthly fee, fees could be charged based on how much a consumer comes to the gym and uses certain equipment, he says.
But the real benefit for payments from the Internet of Things is authentication, says Martin. Not only will the technical aspect of the transaction be possible but [merchants and processors] know for certain that its the actual individual.
Payments experts have already been looking at how using consumers devices for cross-authentication can reduce fraud.
Bionym, a wearable technology startup, is planning to release a wristband that identifies users based on the electrical activity of their hearts, which is unique to every person. Wearable technology is a growing market with a number of companies developing smartwatches, wristbands, rings, eyewear and even bras.
Martin agrees that security is of increasing concern for consumers. But that has less to do with the technology changing and more to do with consumers expectations and sensitivity to it, he says.
Consumers do not worry anymore that they hand their credit cards out to strangers whenever they make a payment, even though that stranger has full access to the cards account number, says Martin.
The security element will fade into the background because as more devices become connected its more of an opportunity to layer secure elements, says Martin.
Consumers, he says, will also be willing to give up a lot of their data because the benefit is that companies will deliver more value if they know exactly what consumers want.
But really what [Internet of Things] is about is creating a platform for communications between devices so theres a high degree of automation with the end game being that all technologies flip into the background so you dont have to pull out your phone to pay or take your keys out to turn a car on, Martin says.