03 Oct Why the mobile payments space is so exciting
It seems as if every big player in the tech sector is developing a mobile payment solution. It’s not just Apple Pay, which was announced with much fanfare at the big Apple launch event in early September, and reportedly could go live as early as Oct. 20. There are now rumors that Facebook is working on mobile payments. Add to the mix PayPal, Square and Google and it’s clear that some of the smartest innovators in the tech world are on the cusp of breaking the mobile payments space wide open.
The reason why the mobile payments space is so exciting right now is not because of all the money to be made – the real reason is because of what the explosion of mobile payment alternatives means for the nation’s “unbanked” – the nearly 10 million American households that don’t use banks, don’t use checking accounts, and basically depend on cash and financial alternatives – like payday lenders and prepaid cards – for their financial transactions.
What’s interesting is to drill down on the data about the nation’s unbanked to find out how mobile banking could help them become part of the financial system. According to a Federal Reserve bulletin released in September 2012, 63 percent of the unbanked have a mobile phone, and of these, 26 percent have smartphones. And, once these unbanked Americans get smartphones, says the Fed, they are more likely to use them for banking. Putting it all together, the Federal Reserve highlighted the significance of this for the future of the nation’s financial system, “The increased use of these devices coupled with the evolution of technologies that enable consumers to conduct financial transactions using their mobile phones has the potential to change how consumers manage their finances as new services and tools emerge.”