Even though it maybe that it would be easier to take your credit card and swipe faster than taking out your phone, launching the app and then initiating a mobile payment, the advantages are as follows:
- The app can tell me if for a particular retail category, I have crossed any predefined limits I have chosen: Say 300 dollars for Gas this month, or 200 dollars eating out.
- The app can tell me, if I make this payment, whether that impacts any bills or checks that are set to clear right away. This lets me avoid any late payments, bounced checks etc.
- If I had a debit card and a credit card with the bank, the app can choose the right card for me to use. If I am near my credit limit, then the app can default to my debit card. Or If my account is drawn out, then it could use my credit card for the purchase thereby saving me Overdraft fees. Or if there were specific coupons that would warrant the use of one over the other, then the app could show benefits of using both and let me choose.
- If the purchase amount is significant, and requires my credit limit to be raised, then the card could do an STP and ask me to whether to increase my credit limit.
- If the purchase amount is significant, instead of using a credit card, the bank could ask me whether i would like to open a small loan and approve me rightaway by showing me the salient details (rate and term).
- The app could show me how many rewards points I stand to gain from making this purchase.
- Even better, The app could possibly allow me to use my rewards points towards the payment instead of paying cash or credit, provided that the bank and the merchant has an agreement in place.
A lot of this might just be wishful dream for a while, but shedding the plastic for a powerful payment alternative will finally deliver on many fronts including the ones outlined above. If Banks continue to think and operate as they did in the past, they stand to lose out against upstarts like Square, Dwolla who are disrupting the payment industry. But I do agree that the players in this space, including the NFC enabled terminals, Banks, Payment Processors all need to work together in facilitating this and ensuring its a seamless process. Yes, it will be a radical shift from how we pay for things today, but there are tangible benefits to customers who are willing to change their payment modalities.
This space is still being shaken out in terms of players and alliances. NFC is still in its early stages, but I believe this is the way to go.
I am interested in hearing others opinions on my views as well.