As the world moves to digital platforms, the way we interact with our finances is beginning to change. There’s more to handling money electronically than just checking your statement online, and “The Future of Money” panel at SXSW highlights some emerging technologies that will most certainly change how we interact with money for years to come.
Moderated by angel investor David Lee, the panel included several startup innovators, including David Boyce, who has raised over $238 million dollars for independent causes through his startup Fundly, to mobile payment startup heads Bill Clerico of WePay and Patrick Collison of Stripe.
Changing the way we use money has always been a challenge due to the structure of the banking industry. “Payments is a very complex area of the Internet. It’s entirely complex and there is a lot of regulation,” Lee said. The vast majority of transactions are processed by legacy and proprietary systems.
However, there does exist an opportunity for startups to alleviate the headaches that occur for wanting to do business online. Companies such as Stripe, WePay, and Square aim to work with small and non-traditional merchants to easily accept payments. The selling point with these companies is ease of use, allowing virtually anyone to sell goods and services. The panel sees more non-traditional businesses emerging because the barriers to entry have been eliminated.
As our world shifts from desktop to mobile devices, payments from phones and tablets will also come into focus. Apps such as Starbucks’ Loyalty and new startups such as Level Up are examples of current mobile payment solutions utilizing Quick Response, or QR codes, to make transactions. The Starbucks application, which allows customers to redeem points and pay for purchases through their phone, has accomplished over 27 million transactions since it launched.
Near Field Communication (or NFC) technology is also a hot topic when it comes to mobile payments. NFC chips embedded in mobile phones will allow customers to swipe their device (and not their credit card) to make purchases at the point of sale. Boyce predicts over $70 billion dollars in mobile phone payments in the next 5 years, yet the system is currently restrained by limited hardware and lack of widespread adoption by phones and carriers.
One of the interesting takeaways that the panel addressed was the fact that advances in mobile payment technology will most likely not come from America, but from emerging markets such as East Africa and Southeast Asia. These countries have the advantage of not having a current infrastructure in place, unlike America, which has legacy systems that are almost 30 years old. The panel also believes that non-traditional players, such as Facebook and Apple, may also emerge to be key players in the industry because of their familiarity with consumers.
Everyone can agree: The future of the way we interact with money will be disrupted by digital. Although there are some key players in the market, will startups be able to overcome the regulatory and logical hurdles? That is the question.