Around 20-30 years ago, when I was a student, I used to make most of my payments by cash. At the time, the emerging technology was credit and debit cards through which you could make purchases at your local supermarket, department store or restaurant.
Apples first foray into mobile payments
Soon, most consumers were shopping with their credit and debit cards, and carrying a lot less cash. With the introduction of chip and pin, card payments were made easier than ever. These days I buy virtually everything by card, and hardly ever carry any cash with me.
At the recent Apple (NASDAQ: AAPL.US) launch event, hidden away between the launch of the new iPhone and the Apple Watch, there was an announcement about something called Apple Pay.
This is this tech companys first foray into the field of mobile payments. It could herald a revolution in the way we make financial transactions.
Imagine if you could buy something just by waving your smart phone or smart watch near a reader. No need to visit the cash machine and juggle change. No need to find your card in your wallet and type a PIN.
Well this future is now here. Apple has introduced technology whereby you just hold your iPhone near a reader and press your phones fingerprint sensor, and the payment is made.
For all you techies out there, the technology is based on radio waves and is called Near Field Communication (NFC). For the rest of us, it means quick and easy payments through your smart device.
A rapidly growing market
Just think about it; all retailers need to do is install readers and shoppers with the latest phone will already be able to make payments.
The market for contactless payments last year was $1 billion. In 2017 it is estimated to be over $50 billion.
These coming advances mean that any time an ID is required, from membership cards to workplace identity cards, NFC could be used.
And which are the companies which are best placed to benefit? Well Apple is leading the way, and we can at last see the logic behind the introduction of fingerprint sensors to its phones. I can also see the link with smart watches. But I expect Google will make sure that Android phones are not far behind.
Apple has already built alliances with Visa and American Express. Barclays (LSE: BARC), through Barclaycard, is Europes leading credit card company. This is an opportunity to extend its dominance in this field. I think companies like Barclays and Visa are working hard to make sure they take the lead in contactless payments.
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Prabhat Sakya has no position in any shares mentioned. The Motley Fool UK owns shares of Apple and Google. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.