8 Ways That The Blockchain Will Change Mobile Payments
Two of the most interesting, and booming, developments in the payments industry are mobile payments and the rise of the blockchain. But, what happens when these two trends combine in order to make a more secure, speedy, and effective way to pay for goods and transfer funds?
Here’s a look at eight ways that the blockchains is going to change mobile payments.
1. Increased Security
The biggest hurdle that mobile payments have yet to overcome are security concerns. The blockchain has the power to change that since the technology focuses on not only being hyper-secure, but also preventing scams like fraud, double-spending, and price gouging. Transactions must be accounted for on a tamper-proof ledger.
2. Instant Mobile Payments
We expect mobile payments to be fast. Like instantly fast. However, it can still take some transaction several minutes or hours for a transaction to go through. This is still an issue with even bitcoin.
By using blockchain technology, payments will become truly instant as developers work on creating faster networks where you could send money to your friend who lives across the world. In just a matter of seconds, your friend can access these funds on their smartphone.
3. P2P Lending
Peer-to-peer lending is one of the hottest trends currently happening in the payments industry. In fact, P2P lending is the fastest growing fintech industry thanks to the convenience, low interest rates for borrowers, and a solid ROI for investors. By using blockchain technology, borrowers can use their mobile devices to secure a loan directly from a lender without having to deal with the regulations and paperwork of traditional banks or financial institutions.
The World Bank estimates that the average cost of remittance across the globe is 7.5%, with commercial banks typically at over 10%. If this could be decreased to even 5%, customers across the globe could experience annual savings of $16 billion.
By removing these third parties, the blockchain could allow mobile users to transfer money to anyone in the world without having to pay for expensive service and transaction fees. A number of companies, like Abra and Coins.ph are already achieving this.
5. Mobile Wallets
As we’ve mentioned before, cash and checks are relics. Even plastic is becoming a thing of the past thanks mobile wallets. With Apple Pay, Samsung Pay, Android Pay, and retailers like Wal-Mart offering digital wallets, the convenience and ease-of-use are appealing to mobile users.
The main obstacle to overcome, however, is security. Blockchain technology will make using mobile wallets even more secure by providing features like multi signature to verify a purchase. The tech can also improve the speed, usage, and reduction of fees for worldwide payments.
6. Reward and Loyalty Programs
Mobile has already proven to be an excellent platform for offering and managing reward programs – just ask Starbucks. The blockchain has the potential to take this to next level by improving the way that points can be traded. Since transactions are recorded on a public ledger, businesses can monitor how points are traded, which is difficult to do right now. For example, you could send some of your points from Starbucks or your airline to your spouse with just a tap of a button.
One interesting app, Plutus, is already rewarding users with digital tokens just for transferring funds or paying for items. These rebates can be used anywhere that accepts bitcoins. In the future, this reward system could be used by merchants to reward customers without limiting them to just one store. For example, you could use your airline reward points at Starbucks.
7. The Unbanked Getting Banked
Access to a bank account remains a major concern in places like Nigeria. Individuals with a smartphone who currently do not have a bank account can use the blockchain. This helps them to participate in global eCommerce, securing loans, or transferring money to friends or family securely and without pricey fees.
8. Expansion of Wearables and IOT
Mobile payments are going to go beyond smartphones and tablets. Wearables like watches, bracelets, and rings are also emerging in the marketplace. There’s also the impending explosion of the Internet of Things. With the blockchain, users can store their payment information without having to worry about fraud.
Most interesting, however, is how easy this is going to make payments in the future. One distant example in the future, via Forbes, is walking into a store to purchase milk. “With a wave of your hand, your smartwatch detects the translucent cryptography on the milk carton and performs a hash function. The milk is now instantly, irrefutably yours.”
As for IOT, the blockchain is giving developers the chance to tinker with APIs. Helping them simplify the connection of all of your devices. Just think. Your fridge may notice that you’re out of milk and order and pay for it automatically.