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Mobile payments 01 Sep 2017

A day without your wallet... but with your phone

Cell phones are now competing with cards and cash as a payment method. The practice of paying by cell phone has become so widespread that in a large Spanish city, it’s now possible to get around, eat and shop without bringing your wallet.

“I left my wallet at home.”This age-old excuse to avoid paying the bill may be on the path to extinction. The movement to use smartphones as a payment method is well underway;  in China, it is the predominant means of transaction. The consultant BI Intelligence estimates that in 2016, the Chinese used their cell phones to pay for products and services worth more than $2.3 trillion, which means that each Chinese citizen on average would have spent $1,700 via their cell phones.

In Spain, even while being very far from those figures, payments via cell phone have started to gain ground. The springboard was the expansion of contactless POS (Point of Sale) terminals and the integration of NFC (Near Field Communication) chips into smartphones, the quintessential technology for this function.

According to data from the Bank of Spain, 2016 was the first year in which POS terminals topped the 3 billion mark, amounting to EUR 124,406 million (that is, an average of slightly more than forty euros each) paid either with a card or cell phone. The total amount grew for the fourth consecutive year, and for the first time surpassed the total amount of cash withdrawn from ATM’s. At the end of the first quarter of 2017, there were 1.7 million POS terminals in Spain, with an inter-annual increase of 6.4%.

BBVA Wallet and Android Pay

As businesses have modernized and gained sophistication in their payment collection methods, banks have developed applications for payment via cell phones, as have large technological companies. The final milestone on this path has been Android Pay, available in Spain since July, thanks to an agreement between Google and BBVA. BBVA Wallet is another simple option for payment from a smartphone, and the application has been downloaded 9.2 million times all over the world.

The technology giants Apple and Samsung also have their own cell phone payment tools—Apple Pay and Samsung Pay—connected to different financial entities.

With all of these developments, could you spend a day in Spain without credit cards or cash, just paying with a cell phone?

If you have a cell phone with one of these applications, the answer is yes, especially if you live in cities or you have a mall nearby.

BBVA Wallet enables you to make a payment simply and quickly just by touching your cell phone to a contactless POS terminal. You just need to type the PIN into the terminal so that it immediately processes the payment, and the user receives a notification, informing them of the details of the transaction they’ve just made.

In addition, users can take advantage of discounts that BBVA Wallet offers in diverse sectors: restaurants, travel, leisure and technology. Android Pay, Apple Pay and Samsung Pay also have agreements with large commercial groups and allow for payment on some applications.

The result is that you can purchase the newspaper and a loaf of bread, put gas in the car, order food and even book a plane ticket without coins, bills or even plastic cards. All you need is a payment application and contactless POS terminal.

Pay with your app

In addition to these specific payment applications, there are also apps that, after registering you as a user, offer the option of directly downloading a product or service to the card that was previously authorized.

Transportation options are a good example. Moving around a big city after forgetting your wallet is possible, thanks to applications like MyTaxi, Uber and Cabify. You can also rent a car for a short time with the Car2Go and emov services. You can use your cell phone to pay a parking meter in cities like Madrid, Barcelona, Santander, Marbella and Segovia. Of course, the user must have previously downloaded the app specific to each one of these services, in addition to registering as a user, and entrusted them with their card information in order to make the purchase.

The progressive generalization of payments via cell phone represents one more step in the gradual disappearance of paper money. In a digitalized world that is nearly free of barriers, cash, with its significant logistical costs, is inefficient, unless you’re trying to get rid of a paper trail or cover up a crime. The debit and credit cards have considerably reduced the importance of cash. In a few years, cell phones may be the nail in its coffin.

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