In our rapidly modernising world, almost all human activities are constantly being improved, adapted and advanced. New applications for the huge technological developments that humanity has experienced over the last half century are always being established. One area which has seen greater attention more recently, but has yet to be significantly advanced for the modern age, is payment systems.
Our global financial systems are reliant on ageing technology, such as Chip & Pin cards and centralised, bank controlled systems which are prone to error. Combined with multiple global financial crisis’, this redundant technology guided innovation in the form of Bitcoin and cryptocurrencies.
Technology giants such as Apple and Google have also shown interest in the possibilities for financial innovation, with both enthusiastically pursuing related projects. Apple Pay has now officially launched in the UK, allowing iPhone 6, iPhone 6 Plus and Apple Watch users to make contact-less payments using their devices.
First released in October 2014 as part of the iOS 8.1 update, the Apple Pay system enables contact-less payments via embedded NFC (near-field communication) chips included in both the iPhone 6 and iPhone 6 Plus.
The large push from Apple to develop the Apple Pay system is symbolic of the growing amount of interest into financial technology, as a sector which still has significant potential for innovation.
Despite offering some extra convenient features for users as they attempt to “forever change the way all of us buy things” according to CEO Tim Cook, the system has suffered from a number of setbacks which are difficult barriers to Apple Pay becoming yet another Apple success story.
Since its launch, Apple Pay has experienced a number of issues with payment delays, double charges and fraud. Many users have had problems with merchants being totally unprepared for the new systems, which essentially takes up the time that should have been saved by using Apple Pay!
Users have also experienced issues when using Apple Pay on the London Underground since the UK launch, as many customers have been subject to doubled charges due to them owning both an iPhone 6 and Apple Watch; if both devices are detected then two default tickets may wind up being purchased without the users knowledge. Errors such as this could have a significant effect on uptake of the new systems and are likely to further limit the companies plans to revolutionise payments.
Bitcoin and block chain technology have also experienced a surge of interest, as potential applications for the innovative distributed ledger system are investigated by multinational banks and fi- nancial services organisations alike. Both Bitcoin and Apple Pay bring much needed modernisation to payment systems, by implementing innovative technologies to revolutionise the way we transfer value between us.
Mobile payment systems are likely to become more and more important as our online lives takeover the long established paradigms of cash and card transactions. The technology for contact-less payments has been functional for some time now, as NFC chips included on bank cards allow users to pay by simply tapping their card on the POS Terminal, cutting out the need to enter pin numbers for smaller transactions.
Bitcoin can also provide a means of contactless payment, through the use of a growing number of powerful mobile wallets which utilise QR codes to save time lost entering long wallet addresses character by character. The long existing norm of using physical cash for smaller purchases and credit cards for larger transactions, has been revolutionised by modern financial systems.
The ease of use of credit and debit cards mean that nowadays many of us will rarely use paper money, Apple Pay will attempt to remove the need for the physical card, instead opting to encapsulate the information it carries into the ‘Passbook’ app.
The app can then transmit the necessary details securely to the merchant via the NFC chip included in compatible devices. With the expansion of online shopping, the need to use physical cash and cards will be even less significant; the potential for innovation is huge and there is a significant opportunity to revolutionise payments. Bitcoin provides a more concrete way of achieving this; it’s architecture mean that double payments are incredibly unlikely without the user explicitly choosing to send funds twice.
The decentralised nature of the cryptocurrency can also provide users with a level of security which is simply unmatched by Apple Pay; despite reassurances that credit card details are not actually transmitted to the merchant, but tokenised such that the relevant account can be charged without transmission of any irrelevant information, Apple Pay still provides a point wherein account/card details are transmitted via a wireless signal.
The cryptographic form taken by Bitcoin means that the computational power required to tamper with transactions effectively renders it an impossibility. Of course, Apple Pay is an interesting application of established NFC technology to digitise our credit cards, whereas Bitcoin is a completely new way of transferring value from one person to another.
Apple Pay isn’t the only “mainstream” financial innovation; their are rafts of companies, large and small, which are pitching their vision for the future of money. Apps such as Venmo, as well as the numerous digital offerings from existing banking and financial powers, are significant of the huge focus on payment innovation.
The block chain utilised in Bitcoin is an incredibly innovative methodology to track value in a way that is secure, straightforward and decentralised. It truly has the potential to revolutionise the way we all buy things; the Bitcoin network and the growing number of intermediaries providing users access to it, provide a way to send money internationally for next to nothing – with significantly lower fees than existing options available.
This is great news for merchants, as usually they wind up paying for the privilege of charging customers and Bitcoin has the power to eliminate this drain on profits. Ultimately this means savings for consumers too; perhaps there is less interest in Bitcoin from “mainstream” business for these reasons? The alternative currency paradigm it provides removes a great deal of the profitability from payment processing, or at the very least makes it highly competitive