You may soon cash in your wallet for a whole new payment device—your smartphone. Mobile phones have already made some everyday technologies extinct, such as your address book and camera, and mobile payments are now reaching all-time highs.
New initiatives change your payment method from plastic cards to digital devices. To date there's no clear market leader, but there is a race to develop an advanced point-of-sale (POS) terminal that will likely render credit card machines obsolete. To work alongside these modernized POS terminals, new cutting-edge payment methods are emerging.
As digital payments increase, security concerns rise with them. Digital payments often involve electronic money, of which many consumers are distrustful. Centralized electronic money transfers such as PayPal are still more common than decentralized money transfers like Bitcoin, although it's debatable which is more secure. Mobile and other contactless payment transfer methods are a new subcategory of electronic money lacking recognized rules or standards.
MasterCard, Visa, and American Express recently proposed global standard for digital shopping. The proposed method involves a digital token to verify payment details made online and on mobile rather than verifying via your credit card number. The process is focused on online shopping, but the standard could easily apply to digital buying methods in brick-and-mortar stores.
In the meantime, software companies are improving online verification and decreasing digital fraud. One of the most innovative companies in the field, Signifyd, approaches digital verification using a 120-factor checklist to confirm your identity, and uses cues ranging from your social profile to physical location. Signfyd verification of a credit card transaction, for example, can track where the purchase is being made, noting your browser and physical location; verify your address and phone number; and match your email address and name to your Facebook, Twitter, or LinkedIn profiles.
Security factors become increasingly important as payment methods enter the wearable and contactless realms. It's estimated that more than 14 million wearable devices have been shipped since 2011, most of which are activity trackers, and they are forecasted to grow between 39 million and 171 million. In Europe where contactless payments have taken off more quickly, usage grew 46 percent in just three months in early 2013; it is predicted to quadruple with 70 million contactless card numbers estimated to be issued next yaer.
Flip to the next page to read about some of the most innovative payment methods you may soon use to check out.
Contactless and Wearable Payment Methods
Pay With Your Face
Finnish company Uniqul is leading the way with its patented facial recognition system that allows you to, yes, pay with your face. The system is still in its infancy, yet outshining competitors like Square or the highly anticipated Clinkle as it advances with "military-grade" encryption. Uniqul requires no phone or wallet and essentially uses your face as a PIN number to authorize purchases. Few details have been officially released beyond a preview Youtube video but merchant costs are speculated to be as little as $1 per month for a one to two kilometer distance level, and $9 per month for a second, wider range level. The service is expected to launch in the metropolitan area of Helsinki, Finland soon.
Pay With Your Emotions
Simplate, an interactive customer display, goes a step further in facial recognition by incorporating contextual data at checkout. Created by global tech startup Synqera, Simplate is an emotion-scanning touch-screen device featuring software that incorporates real-time parameters such as place and time. The system lets stores customize your checkout experience and target you based on your moods. For example, the system could collect data on your reaction to viewed content, use facial recognition to gauge your mood, and add the current weather conditions into the mix to provide a truly unique checkout. With Simplate, payment transaction uses the contactless Visa PayWave or MasterCard PayPass.
Pay With Your Hands
Forget the phone and wallet altogether; you could soon be paying with your hand gestures thanks to Secret Handshake. The payment method uses gesture control intelligence from Leap Motion and point-of-sale shopping cart software, Clover. Secret Handshake requires only hand gestures, such as moving two fingers in one direction and then making a fist to process payment. Essentially the payment system would allow you to have your own "secret handshake," or sequence of gestures to authorize payments.
Pay With Social Media Currency
You could soon buy vending machine snacks and drinks without actually spending a dime by using your cell phone. Like us Network, gaining traction with funding from serial tech investor Mark Cuban, is on a mission to upgrade the standard vending machine payment process. Like Us Network hardware can be added to any standard vending machine to enable mobile payment with PayPal, Google Wallet, or a credit card. Buying happens via mobile website or mobile app, where various social incentives are also available. You could, for example, trade a social media shout-out for a free snack or drink. The company is exploring other methods of rewarding social status and loyalty such as flexible product pricing, with lower prices offer to buyers with higher Klout scores .
Pay With RFID Jewelry
A team of MIT students wants to replace public transit cards with wearable rings via Kickstarter-backed project Sesame Ring. The project profiles customizable 0.6-by-0.6-inch "Sesame Rings" that replace Boston's public transit cards, called Charlie Cards. The 3D-printed rings contain an RFID tag and can be refilled at a regular Charlie Card kiosk. To ride the T, simply tap your ring against the existing transit sensor to make your payment. The project is Boston-based, but the team plans to expand nationally and broaden Sesame Ring payment capabilities beyond public transit.
Pay With Your Watch
Given the buzz around smart watches it's no surprise we'll soon see payment integration in them. Watch2Pay, in partnership with MasterCard, is a watch built specifically for payment. The watch contains a prepaid MasterCard PayPass microcard, which is paired with a regular prepaid plastic card. Both the card and watch enable contactless payments at any location with a PayPass terminal. Watch2Pay is one of the first devices to gain popularity, but with upcoming smartwatch releases over the next year expect to see this technology duplicated and improved upon.
Pay With Contactless Bands
From Disney World entertainment complex to Hyde Park concerts, companies are launching a slew of contactless payment wristbands for group settings. This summer Barclaycard released PayBands to give concertgoers quicker entry to events and easier payments options. PushCoin takes a similar approach with RFID wristbands for parks, resorts, and schools. The battery-free, waterproof PushCoin wristbands allow for tap-and-go payments and tap-to-open capabilities, letting wearers tap to open hotel room doors or school lockers. Disney World is even jumping on board with MagicBand, a wearable RFID device that unlocks hotel room doors; provides admission to theme and water parks; and connects to PhotoPass, Disney's digital stored image service.