Mobile payments are slowly becoming the new normal in the world of finance. Although there is still a long way to go, credit cards are feeling the pressure. More specifically, a new UNCTAD report shows credit cards will be dethroned by mobile counterparts very soon. This may happen as soon as 2019, which puts the pressure on Visa and MasterCard by quite a margin. Developed countries will certainly see a major shift in the coming months and years.
No one can deny mobile payments are making a big impression right now. Especially in developed countries, they become the new norm rather quickly. This doesn’t mean everyone will be paying using a smartphone soon, though. Developing regions, where cash is still king, won’t see any big changes in the near future. However, a new report by UNCTAD shows the change is coming eventually. More specifically mobile payments will overtake credit cards as soon as 2019.
Mobile Payments Still Require Credit Cards
That is a rather ambitious goal, but it is not entirely unrealistic either. With credit cards taking up 51% of all payments in developed regions in 2014, there was little reason for concern. However, that number will dip by 5% by 2019. New technological advances will herald an era in which mobile solutions take precedent. Kenya is touted as one of the regions where this change will occur first. Even for online transactions, credit cards are quickly losing ground there.
Other countries are seeing a similar trend take shape. For example, China has seen its fair share of mobile payment growth recently. With WeChat Pay and Alipay generating a lot of momentum, things are looking good right now. More specifically 68% of domestic online shoppers moved away from using credit cards directly. Do keep in mind these mobile solutions rely on customers adding payment information, such as a credit card or bank account. Otherwise, customers can’t pay for anything.
All of this goes to show the direct use of credit cards will undergo some changes. Indirect usage of payment cards, mainly through mobile payments, will not change all of a sudden. In fact, it may become even more popular as time progresses. With the introduction of blockchain technology, interesting things will happen moving forward. The big question is which form of payment will benefit from this technology first and foremost. Right now, that question remains unanswered.
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