Evolution of payments: apps, mobile wallets and Bitcoin
Mobile apps are improving our everyday lives and simplifying many action we take, making it faster and better. We begin our morning checking weather forecasts, we look for the cheapest train fare, we read the news, we listen to the music and we go to sleep at night after playing some games. How many apps are installed on our smartphones? According to a Yahoo! Aviate study, an Android device contains on average 95 apps (but only 30 are used during the day), Apple devices “only” have 60 apps installed on average instead*.
Ever wondered why the business of apps is so strong and successful? It’s all in the “product”: apps are relatively fast to develop, easy to install on devices and mainly free at download. These key features make it easy for apps to reach different clients, that build a huge demand made of small groups of customers. We can find an app for every need and what if it does not exist yet? Maybe it’s a good opportunity to turn our idea into a new project.
Among the most successful apps, we are witnessing a boom in mobile wallets, that have shaken the entire finance system. The transition from cash to credit cards, represented the very first important revolution in traceability and fast payments. During the last decade, this innovation has been supported by the introduction of payments via smartphone. Pioneers in this sector have been banks worldwide which have partnered with telephone operators to develop powerful and functional apps.
The most recent tools for mobile payment rely on a simple gesture: you just have to lean your smartphone on a device placed on cash desks to pay and have your transactions validated and recorded on the app. It’s an effective way to engage users with a new customer experience and give them the possibility to go shopping without cash, credit cards and wallets (remind to bring your ID though!). Everything we need is in the app itself. This fast payment system lowers the average check out time for a single customer and avoid the risk of forming long and stressful lines at cash desks. It enhances stores security as well, helping reducing cash circulation and creating a safer place to work for employees. Last but not least, it creates good opportunities to engage with customers, increasing retention rates and promoting other services within the app.
Another big transition we are experiencing, after the dematerialization of wallets, is the creation of virtual currencies, such as Bitcoin, Ethereum, Litecoin and many others. Among those, the most mentioned in debates is Bitcoin, a virtual cryptocurrency which first appeared in 2009 and has recently seen a steep increase in its value against other legal currencies. Why is Bitcoin so successful? As a virtual currency, it cannot be influenced by central banks monetary policies, it gets its value from the market and is not affected by politics turmoil.
The most innovative and interesting feature of Bitcoin is the Blockchain, a system that exchanges information as a network and is bound to every transaction to guarantee the correct movement of money. This avoids the creation of central actors (usually banks) which need to confirm and approve each transaction. Bitcoin is based on a network made of nodes and on validation processes performed by users around the world instead of having a central and unique node. Transactions are performed inside “blocks” which are then added to the “chain” after their validation creating a unique identification process. This mechanism ensures that a single bitcoin cannot be lost or used by more than one user. In fact, every transaction is shared with all users at the same time, that confirm the correct version of the Blockchain. All operations are supervised by the whole community and not by a single person.
In conclusion, we are going through a lot of changes in savings and transactions management thanks to new Fintech companies and to people changes in habits. The idea of transactions in our century has been twisted and the real challenge for virtual banks, currencies and apps will be to invest on security and win people’s trust. Can’t wait to see what will be next!