How Will 5G Impact Mobile Payments?
5G or fifth generation cellular network technology is the latest development in the world of mobiles and smartphones. This upgrade from 4G promises better mobile speed, reliability and capacity. 5G offers these advantages due to the use of Massive MIMO (Multiple Input, Multiple Output) antennas, edge computing, smaller cells, beam forcing, and better WiFi to cellular convergence.
Fifth generation (5G) technology is now live in many parts of the USA and the United Kingdom. It will be rolled out in many other countries in late 2019 and in 2020. Initially, 5G will be used for mobile connectivity through 5G enabled smartphones. It will also connect devices with limited mobility like modems and hot spots, which in turn connect to other devices over WiFi. 5G will also be enabled on fixed wireless access devices, with antennas permanently mounted on buildings. This provides broadband services to homes and businesses.
Different industries/businesses like driver-less cars and the Internet of Things are expected to benefit with 5G communications technology. In this article, we will specifically focus on how 5G will transform the day-to-day lives of consumers via improved mobile banking and mobile payments.
Growth Of Mobile Payments & Digital Wallets
Over the last few years, mobile payments and digital wallets have seen tremendous growth. This is due to the higher penetration of NFC technology. Also FinTech providers and of course, growth in the use of smart phones. Mobile payments are not only popular in cities where we can use it for daily retail transactions like groceries or a cup of coffee. They are also used by farmers in Africa and South Asia to receive payments for agricultural goods.
Mobile payments are especially popular among the millennial generation. Millennial’s have accepted this technology more easily, than the more cautious older generations. In the US, mobile banking applications are the third-most used on smart phones after social media and weather. Social media applications like WeChat Pay and Facebook Messenger Payments have also included mobile payments through their applications.
With 5G, this brings with it the promise of super-fast uploads and downloads, ultra-low latency in transactions and better connectivity to the cloud. This is expected to promote real-time transactions. And also help to deliver new and innovative ways to provide consumer friendly mobile services.
Four Ways 5G Will Change The Mobile Payments Industry
The following are some of the ways in which 5G could potentially impact the mobile payments industry.
1. One-to-one payments: Mobile payments and mobile banking are expected to grow rapidly across the world thanks to the easy access they provide to regions which are out of reach for traditional banking methods. With 5G speeding up data up to 3 times as compared to the current 4G network, the overall consumer transaction experience will be improved leading to more and more people relying on mobile payments. Even the exchange of a minor sum of money between friends. (Which was almost always a cash transaction earlier), will take place via mobiles.
2. Contact-less and Retail Payments: Facilitated by digital technology, retailers would be able to provide a smarter and more customized payment process to its consumers both online and in-person. Due to the high speed of connections, consumers would be able to browse through online catalogues. Then apply filters, select and even try their purchases virtually, before paying for them. All within a matter of minutes. This would lead to a further growth in retail and online payments.
3. Big-Ticket purchases: Purchasing big-ticket items like cars or homes, often require lengthy processes. This can take loan application processing, to credit check and finally loan activation and disbursement. 5G would help banks combine user data and artificial intelligence in real time to speed-up the end-to-end experience. High resolution streaming capabilities will enable customers to interact with financial consultants giving them more confidence before making any decisions.
4. Transaction Security: 5G will enable the use of multi-modal bio-metric authentication features that rely on different characteristics of a persons physiology and/or behaviour. Large amounts of bio-metric data are usually required for authentication. This data then needs to be sent to matching engines which analyse patterns in this data.
5G will ensure faster uploads of this data thereby enabling faster verification. Even when multiple authentication factors are used. Bio-metric security is especially required when wearable devices are used for mobile payments. Improved security can lead to the increase in the use of such devices for mobile payments.
Overall, the impact of 5G on mobile payments is expected to be positive. 5G will take mobile payments and banking to new heights. It will increase the speed, versatility and security of transactions, making mobile banking truly ubiquitous.