Imagining the Internet examines the future of money
Tech experts surveyed by Elon say payment with mobile devices and cloud storage of financial information could be commonplace by 2020.
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What is your wallet? Mobile devices represent the future of money
Tech experts say payment with mobile devices and cloud storage of financial information could be commonplace by 2020—although a number of potential hurdles and holdouts stand in the way
In a new Pew Internet/Elon University opt-in, online survey of a diverse, non-random sample of 1,021 technology stakeholders and critics, a majority expressed confidence that by 2020 most people with smartphones will have embraced and adopted the use of smart devices for purchases they make, nearly eliminating the need in most cases for cash or credit cards.
Many of the people surveyed by Elon University’s Imagining the Internet Center and the Pew Research Center’s Internet & American Life Project said that the security, convenience and other benefits of “mobile wallet” systems could lead to widespread adoption of these technologies for everyday purchases by 2020.
“The consumer is far more comfortable and protected in financial dealings than in the days of plastic and magnetic strips,” said Rob Scott, chief technology officer and liaison at Nokia. “Every transaction that could be attributed to them is routed to their personal, secure grid for approval or denial.” Hal Varian, chief economist at Google said, “The 2020 date might be a bit optimistic, but I’m sure this will happen.”
While 65% of the survey respondents agreed that smart-device swiping is likely to be commonplace by 2020, relatively few who chose that view expect cash or credit cards to disappear entirely. Some—including some top experts who are generally positive about the future of mobile payments—say the changeover to e-wallets will unfold slowly due to resistance from those with a financial stake in the existing payment structure and a combination of privacy fears, generational preferences and a lack of infrastructure to support widespread adoption.
Those who chose the optimistic scenario pointed out that mobile payments are already commonplace in many parts of the world today and that money has already been largely digitized in the modern economy. Mobile payments build on this ongoing digitization, but with an additional layer of security and convenience for users. Indeed, a number of experts argued that mobile payments do more than simply replace existing payment mechanisms—they offer consumers new ways to monitor and gain value from their purchasing habits, and even open up the potential for entirely new forms of currency.
“For many of these experts, ‘mobile money’ represents more than just existing processes adapted to a new, more portable form factor,” said Janna Anderson, director of Elon’s Imagining the Internet Center and a co-author of the study. “They see this as an opportunity to implement security measures that are lacking in our current financial systems, to offer consumers more control over their spending and to even reinvent the way we think about the concept of ‘money.’ However, top people from Microsoft, Nokia and Netflix were among the many who said it is up to those who control transaction systems to set the timetable for adoption, and smart-device swiping will not be fully supported on a wide basis until they are convinced it is to their advantage to facilitate the transition.”
Although most of the experts surveyed expect mobile payments to play a prominent role by the year 2020, many envision mobile wallets supplementing—rather than fully replacing—more traditional forms of payment. Some expect this change to evolve along generational or socio-economic lines, with younger and more well-off consumers flocking to the convenience of mobile payments while others stick with tried-and-true methods. Others predict that privacy or security concerns (i.e., a fear of storing all of one’s sensitive information digitally in the cloud where it can be stolen or used for marketing purposes) as well as a desire for anonymity when making sensitive purchases will ensure that cash maintains a foothold in the consumer economy for the foreseeable future. And still others predict that the financial services industry will delay any wholesale migration from their lucrative business in debit and credit card transactions.
“Due to concerns about the technology, resistance by incumbent providers and the generally slow nature of societal change, there is a fairly consistent feeling among these experts that mobile payments will exist on a spectrum along with a number of other financial options,” said Aaron Smith, a senior research specialist at the Pew Internet Project and co-author of the study. “Indeed, some expect these services to most quickly reach widespread adoption in the developing world, due to its lack of an incumbent banking sector and ingrained consumer habits.”
This is third report generated out of the results of a Web-based survey that gathered opinions on eight Internet issues from a select group of experts and the highly engaged Internet public. (Details can be found here: http://www.elon.edu/e-web/predictions/expertsurveys/)
Following is a selection of respondents’ remarks:
“There is nothing more imaginary than a monetary system. The idea that we solemnly hand around printed slips of paper in exchange for food and water shows just how trusting and fond of patterned behavior we human beings are. So why not take the next step? Of course we'll move to even more abstract representations of value. Other countries are already content to use their phones; we'll catch up eventually.” – Susan Crawford, professor, Harvard University
“Widespread adoption of point-of-sale capabilities like NFC seems inevitable, along with the creation of robust and secure personal digital wallets. The parallel rise of reliable multifactor biometric authentication will help secure electronic transactions.” – Mike Liebhold, senior researcher, Institute for the Future
“So many people are already accustomed to buying a cup of coffee with a credit card that smart-device swiping is only a very small next step.” – John Pike, director, GlobalSecurity.org
“I for one welcome my beast-marked future financial transactions. Just look into my eye–biometrically of course—and add to my e-wallet,” –Paul Jones, associate professor at the University of North Carolina-Chapel Hill
“The driver here will virtually 100% be whether or not the credit card industry decides it can make more money through changing technologies,” – Jonathan Grudin, principal researcher, Microsoft
“The consumer is far more comfortable and protected in financial dealings than in the days of plastic and magnetic strips. If they wish, every transaction that could be attributed to them is routed to their personal, secure grid for approval or denial…The primary impediments to adoption have been, and will continue to be, the participants (and wanna-be participants) in the payment value chain. Operators will continue to attempt to insinuate themselves into the process at a premium rather than simply accepting their long-term fate of being minimum-margin bit pipes for the masses. Transaction processors will continue to assert they are adding value when, in fact, they add none. Banks, if we are lucky, will be once again tightly hamstrung into serving their original intended purpose.” – Rob Scott, chief technology officer, Nokia
“People are ready to adopt. At the same time, an increasing number of consumers are watchful of their privacy and security, as well as being reasonably charged for transactions. Inertia is also a major factor. Consider the decades it took for ATM and debit card transactions to come into widespread use. Yes, there will be early adopters and pioneers with digital wallets. By 2020, it's unlikely that cash will disappear among the mainstream majority.” – Dan Ness, principal research analyst at MetaFacts, producers of the Technology User Profile
“Swipe and NFC are just means of exchanging credentials and intent, and cards are just tokens. We’ll see a lot more mixes.” – Bob Frankston, ACM Fellow and co-developer of VisiCalc
“The concern of someone hacking into your financial flows will continue to grow, and personal security and device-tracking companies will become an integral and major component of the marketplace.” – Laura Lee Dooley, online strategist, World Resources Institute
“What is in your wallet now? Identification, payment, and personal items. All this will easily fit in your mobile device and will inevitably do so. But it may take a while. It is generally thought that two-factor authentication (secret + physical device) is better than one-factor authentication, and smart phones seem to have a natural role here.” – Hal Varian, chief economist, Google
“Credit and debit cards will almost be dead by 2020 because of the convenience and lower costs of directing payments through mobile devices, either by swiping, near-field techniques, or other services offered by cell carriers or platform companies like Apple.” – Stowe Boyd, consultant and author
“In 2020 corporations will be happy to milk oldsters for exorbitant check and credit card handling rates—as they do today—and to keep all these systems unsecure as long as possible, as that allows insurance companies to make a lot of cash off of ensuring against identity theft, etc. Financial companies make the most money of any business class, and they have incentives to keep things nontransparent and changing the least slowly.” – John Smart, futurist, founder of the Acceleration Studies Foundation
“Cash and credit cards as we know them are on their way out. Automation is here and will keep rushing in…The bigger question to me is whether the dollar will still be the mainstay of civilization, and in fact whether most transactions will be denominated in fiat currencies.” – Jerry Michalski, founder of Relationship Economy Expedition and consultant at the Institute for the Future
“Not only will our notion of currency change as it becomes electronic and (even more) virtual, but I see the possibility for new currencies measuring new value.” – Jeff Jarvis, professor, speaker, and author of “What Would Google Do?”
Respondents were allowed to keep their remarks anonymous if they chose to do so. Following are predictive statements selected from the hundreds of anonymous comments from survey participants:
“Coming from a highly regulated industry, I know that banks are currently exploring these options. Not only is cloud computing resulting in frightful consequences for protection of customer data, but every day a new discovery is being made about the lack of safety surrounding mobile devices. After being exposed to this scary information on a daily basis, I don't even want to use my credit cards anymore, let alone a mobile device to pay for my groceries”
“Convincing people that the benefits of these devices outweigh the cons will take more than a decade. The burst of popularity for innovations such as Bitcoin indicate that, if anything, people tend to want their financial transactions to be more private. Technologies that offer a relatively small measure of additional convenience at the expense of far less privacy will struggle for adoption.”
“Prediction: The adoption of smart-device payment systems went exceedingly well up until the blackouts of 2015 and 2016, which lasted several days in many urban areas. This permanently impacted the progress towards any sole reliance on electronic payment systems. Now in 2020 people rely on the four major methods of payment: Smart-devices, national currencies, networked work barter points systems, and the new global ‘poker chip’ currency that uses interlocking machine readable plastic chips that are impregnated with gold foil.”
“By 2020, most people will have embraced and fully adopted the use of smart-device swiping for purchases if smart-swiping programs find a way to work around the banks. The banks will have taken to charging such exorbitant fees for any use of the money that individuals have stored with them that individuals will cease to use banks. There will be privacy and technological concerns, but anger at the banks will outweigh those concerns.”
“The train has left the station. The only people who will need cash are those that are trying to hide something. Biometric identification technologies will be standard, so fraud will be reduced substantially.”
“Cash usage will increase to avoid creating records of purchases for sensitive items and to enable black market purchases that avoid excessive VATs or sales taxes. The United States will catch up with the European comfort with touch payments.”
“Hard money will disappear. This will emphasize the embedding of individuals in the digital world.”
“It’s dangerous to go down the road of a cashless society. We see what happened when a few people are in control of other people's cash—the housing market crashing, manipulation, and scandal. The first paragraph scares me because I see it being at the beginning of a road of corruption. And I see it as a system that's easily broken—not good.”
The findings reflect the reactions in an online, opt-in survey of a diverse set of 1,021 technology stakeholders and critics who were asked to choose one of two provided scenarios and explain their choice. While 65 percent agreed with the statement that most people will rely on swiping smart devices to execute most transactions, a significant number of the survey participants who selected that scenario said the true outcome will be a little bit of both scenarios.
65% agreed with the statement:
“By 2020, most people will have embraced and fully adopted the use of smart-device swiping for purchases they make, nearly eliminating the need for cash or credit cards. People will come to trust and rely on personal hardware and software for handling monetary transactions over the Internet and in stores. Cash and credit cards will have mostly disappeared from many of the transactions that occur in technologically advanced countries.”
33% agreed with the opposite statement, which posited:
“People will not trust the use of near-field communications devices and there will not be major conversion of money to an all-digital-all-the-time format. By 2020, payments through the use of mobile devices will not have gained a lot of traction as a method for transactions. The security implications raise too many concerns among consumers about the safety of their money. And people are resistant to letting technology companies learn even more about their personal purchasing habits. Cash and credit cards will still be the dominant method of carrying out transactions in technologically advanced countries.”
Note: The survey results are based on a non-random online sample of 1,021 Internet experts and other Internet users, recruited via email invitation, conference invitation, or link shared on Twitter, Google Plus or Facebook. Since the data are based on a non-random sample, a margin of error cannot be computed, and the results are not projectable to any population other than the people participating in this sample. The “predictive” scenarios used in this tension pair were created to elicit thoughtful responses to commonly found speculative futures thinking on this topic in 2011; this is not a formal forecast. Many respondents remarked that both scenarios will happen to a certain degree.
The Imagining the Internet Center (http://www.imaginingtheInternet.org) is an initiative of Elon University's School of Communications. The center's research holds a mirror to humanity's use of communications technologies, informs policy development, exposes potential futures and provides a historic record.
The Pew Research Center’s Internet & American Life Project (http://wwwpewInternet.org) is a nonprofit, non-partisan “fact tank” that provides information on the issues, attitudes and trends shaping America and the world. It produces reports exploring the impact of the Internet on families, communities, work and home, daily life, education, health care and civic and political life.