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This column appesrs in the September issue of Cards&Payments.
I'm really enjoying the iPhone I bought back in December. I use it all the time. But what I'm especially fond of is the wide array of applications available. There are thousands, in fact. I've even used one to order a taxi and to pay the fare.
So-called smartphones such as Apple Inc.'s iPhone and Research in Motion Ltd.'s BlackBerry Storm soon could be on the verge of changing how consumers pay and how some merchants accept payments. As illustrated in this month's cover story by Cards&Payments Senior Editor Nadia Oehlsen, more and more consumers are using the devices to access their bank accounts and to pay bills. With some of the emerging applications, they also can pay merchants.
Though dozens of smartphone applications are available to consumers to use to initiate electronic payments and to merchants to make it easier for them to accept them, my gut feeling is that the payment apps are merely a fad and that consumer and merchant interest will wane over the long term.
Once phones with Near Field Communication capability become widely available, I believe contactless payments via wireless phones will mushroom much more quickly than any smartphone payment apps available now. NFC payments simply are quicker and easier, and the acceptance infrastructure is building globally.
Apps that could change the banking industry more dramatically are those that support remote deposit capture. In fact, they could have a huge impact by reducing demand for bank ATMs. Such apps enable customers to use the cameras on their smartphones to capture images of checks. The apps send the images to the bank, which deposits the funds into the user's account, alleviating the need to use ATMs for check deposits.
USAA, a financial-services company for military personnel and their families, for example, in August launched Deposit@Mobile, an iPhone app it created for remote deposit capture. During the first three days the service was available, customers deposited $1.5 million.
Take that result and Bank of America Corp.'s recent decision to close 10% of its branches, in part, because of growth in mobile banking, and smartphone apps become a trend the payments industry should closely monitor now, not later.
Jeffrey Green
Editor-in-Chief
Cards&Payments
