Mobile Banking and Payments the Next Frontier

Without a doubt, one of the greatest new frontiers for technology is to take the banks and credit card companies out – the same way tech companies have taken out retailers, film producers such as Kodak, florists, record companies and more. Expect the major players new players in the space to be Apple, PayPal, Google and Microsoft – interestingly in the late nineties, a Microsoft exec gave a keynote address at a TMC expo and said that we will see mobile payments on the horizon – the prediction will and has come true but one wonders if the world’s largest software company can keep up in the race for mobile – let alone mobile payments.

I have already deposited two checks via mobile phone applications and although it is a weird feeling to rip up checks with your name on them once you are done – it does show how comfortable people will likely become with using their phone as a payment and deposit vehicle. After all, I felt weird the first few times I deposited a check into an ATM machine – many years ago.

Back in February of this year, there was a story on the TMCnet 4G Wireless Evolution site from Patrick Barnard discussing how mobile check deposits will eventually come into being and more recently Chase Bank and PayPal have put the theory into practice with iPhone apps. Others are expected to follow suit and Bank of America is said to be testing an app as well.

Moreover there is now an alleged war between Google and Apple to acquire mobile payment provider Boku – the company responsible for in-app purchases on the Android platform.

So where do we go from here?

Simple – mobile banking will continue to be a hot space which will be potentially divided between the companies mentioned above as well as credit card companies and other banks.

The biggest fear for established players is that PayPal, Apple and Google will cut their legs out from under them over time. Sure it won’t happen quickly and in fact banks like Citibank are evolving by putting computers in credit cards allowing them to have increased security and moreover assume the role of all the current credit cards you carry. In other words a single computerized card can become your American Express or Visa – changing based on your needs.

Jeffrey Mullen, founder & CEO of Dynamics Inc. discusses the credit card of the future on CNBC

The reason why this matters so much of course is the magnetic strip which is read by credit card readers is a standard which is so widespread that making a point of sale purchase today generally requires support for this lowest retail common denominator.

While technologies and new standards evolve and mature – the direction of the market is unmistakable. More power will be transferred from banks and credit card companies to new technology companies and existing ones like PayPal. And as this trend continues we may expect new opportunities for startups as well as more competition for the consumer’s money.

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