Mobile Payments – Making Them More Secure On The Blockchainbr>
If you’ve been in a checkout line recently, it’s unlikely that you’ve witnessed someone counting bills or fiddling with change. This may be bad news for the frugal among us looking to pay with exact change, but it’s pretty good news for the rest of us. The transition away from actual dollars and cents and toward electronic payment methods is real, and it’s escalating quickly.
In other words, the anecdotal experience of most shoppers corresponds with survey trends about our increasingly cashless society.
The Pew Research Center survey found that only 25% of shoppers routinely use cash to make purchases, with an equal number reporting that they never use cash. Additionally, 40% of respondents never worry if they have cash when they are out shopping. In conjunction, a survey conducted by Bank of America attributed these changes to the emergence of peer-to-peer payment services and the rise of e-commerce, which necessarily requires a payment method other than cash.
Indeed, access to alternative payment methods makes cash and change seem archaic. From credit cards to contactless payment methods, there are just better and more convenient ways to pay for things.
Impressively, these services are supplanting 1,400 years of monetary norms. In an expose on the history of money, Time Magazine notes that paper bills have been a dominant medium of exchange since China’s Tang Dynasty in A.D. 618., an impressive run that’s seen physical currency adapt and ameliorate to accommodate the changing needs of the times.
However, the digital age is making cash obsolete, and it’s doing so at an astounding rate and scale.
The scope of the cashless society
With the majority of the world equipped with smartphones and an internet connection, mobile payment methods like Venmo, PayPal, as well as the payment features from companies like Apple, Google, and Samsung, make spending money as easy as sending a text message.
These features work great in social settings. Friends can easily send money to one another, and, in China, you often can’t get out of a taxi without having to scan a QR code. Contactless payments may be novel, but they are quickly being adopted as the simplest and most convenient way for many people to make purchases. As credit juggernaut Visa concludes, “Contactless payments, where you simply tap to pay with a contactless card, payment-enabled mobile, or wearable device at a contactless-enabled checkout terminal are taking parts of the world by storm.”
To be sure, cash has been on the decline well before the mass adoption of mobile technology made it almost farcical.
In 2012, The Huffington Post reported on the increasing prevalence of credit cards as the primary cause of disappearing cash. At the time, plastic was replacing cash, as 66% of in-person sales were made online. Today, more people are making purchases online than in stores, so this trend will continue to move people away from cash.
These payment methods certainly reflect the ethos of the digital age, but their novelty means that standards and norms that protect businesses and consumers are still very much in flux. As the continual headlines reporting high-profile data hacks reminds us, digital payment methods are incredibly vulnerable to hackers and cybercriminals.
In short, these changes are occurring relatively quickly, with many of the latest payment methodologies just a few years old. As a result, new technologies will need to account for changing consumer habits to protect payment companies and the people who so readily use their services.
The architecture of digital payment systems
In many ways, blockchain-based architecture is the natural next step for managing the emerging and quickly proliferating payment systems.
For example, unlike the current system that relies on companies to store and protect user information, the blockchain restores ownership and control to the users. Using the blockchain’s tokenized infrastructure, users can withhold their names, banking information, billing addresses, and other sensitive personal information that is likely to be compromised in a centralized system.
Since most mobile and contactless payments are facilitated using biometric verification like a fingerprint or a face scan, this data can be stored on the blockchain as well, eliminating the need for pins and passwords, while providing users with an easy and reliable way to confirm their information.
Of course, transactions can’t be facilitated without some semblance of personal information, and the blockchain accounts for that as well. Its distributed ledger can perfectly and securely maintain a record of user information that users’ share with companies using tokens, attestations, or other distributive methodologies.
It’s unlikely that anyone will be rushing back to cash anytime soon, so it’s imperative that companies and consumers have confidence in the payment architecture that facilitates transactions in the digital age. The blockchain’s distributed ledger offers superior protection by almost any metric, and its usability and scalability are continually increasing. Ultimately, it represents the next-generation technology capable of securing the next-generation of payment processes in a way that benefits companies and consumers alike.
About the author:
Alastair Johnson is the CEO of Nuggets, an e-commerce payments and ID platform. It stores your personal and payment data securely in the blockchain, so you can make simple e-commerce payments and other transactions, without having to share your personal data with anyone – not even Nuggets.