From The Apple to The App: How We Got to Mobile Payments

How We Got to Mobile Payments

It’s a well-known fact that human beings have relied on some form of payments system for quite some time now. In fact, the original form of payment exchange (the barter system) dates all the way back to 6000 B.C.

Here, the local farmer would take a bushel of apples to trade with the city baker for a pie. The baker would use the apples to bake another pie that he would then give to the repair man in exchange for fixing the oven. And thus, the first form of payment remittance was born.

The Mesopotamian people then created the shekel – the first official form of currency – in 3000 B.C. This eventually evolved into a system called “Coinage,” in 650 B.C., that provided a tiered classification of copper, gold and silver offered in exchange for goods and services. Paper notes soon followed in A.D. 960 – the first of which, “Jiaozi,” were printed in Sichuan, China. And then (finally) we graduated to plastic much, much later in 1950.

And, oh, how the plastic revolution took us by storm…

Credit cards offered a level of freedom and independence that we, as a society, had never known before. But what if you were to learn that the first mention of the credit card actually dates all the way back to 1888?

Well, it’s true! The first official credit card reference on record came from an American novelist/journalist/political activist named Edward Bellamy. He introduced the term “credit card” to the world in his novel Looking Backward.

The book tells the story of a young American who, towards the end of the 19th century, falls into a deep, hypnosis-induced sleep and wakes up 113 years later. The year is 2000 and during his hypnotic sleep, the United States was transformed into a “socialist utopia.” The remainder of the book outlines Bellamy’s thoughts about improving the future. One of the major themes discussed includes the use of credit cards.

The Mobile Movement

So, how did we go from plastic to digital/mobile in what is considered to be a relatively short amount of time given the advance in technology? Well, we are a species driven by instant gratification so one could only assume mobile payments were inevitable. After all, what provides more instantaneous satisfaction than being able to pull out your phone and immediately open Amazon to purchase the item you were thinking about on an unexpected whim of impulse?

Fun fact: In the same utopian novel, Bellamy envisioned a version of Amazon where every product is on display, people choose what they want and have it delivered to their house within a day. The only difference here is Bellamy envisioned this happening via set of “tubes.”

As for the first official mobile payment, that came from Global brand Coca-Cola in 1997, believe it or not, when they introduced a limited number of vending machines that enabled customers to text the machine directly as a means of setting up payment. Upon receiving the text, the machine would then vend their product.

Regarding what happened next, it goes something like this…

· 1998: PayPal is founded

· 1999: Mobile phones could be used to purchase movie tickets

· 2003: 95 million cell phone users worldwide made a purchase via their mobile device

· 2007: Both the iPhone and the Android OS are released.

· 2008: Bitcoin is invented

· 2011: Google Wallet is released

· 2014: Apple Pay is launched, followed a year later by Android and Samsung Pay

· 2020: 90 percent of smartphone users have made a mobile payment

· 2022: Already valued at USD 1449.56 billion in 2020, the mobile payments market is expected to reach USD 5399.6 billion by 2026

Needless to say, mobile quickly began to dominate the payments landscape and continues to move at warp speed – with no sign of slowing down.

The Way to Pay

Given that mobile payments have officially earned their street cred since 1997, what does it look like in 2022? Well, as it stands right now, there are four different types of mobile payments:

1. Mobile browser-based payments: Customers can visit the online retail storefront of their choice, select their items for purchase by adding them to their shopping cart, and then pay for their purchases on their mobile device using either a credit card, debit card, gift card or ACH payment.

2. In-app mobile payments: These are very similar to browser-based payments, except with this method customers login to a proprietary retail app to purchase their goods or services in a closed ecosystem.

3. Mobile or wireless credit card readers: With this option, businesses can turn in their smart phones or tablets into a convenient point-of-sale system. This allows you to swipe, tap or dip credit cards on the spot, while wireless terminals offer the same convenience and work off Wi-Fi to enable credit card acceptance at various locations.

4. Contactless mobile payments or mobile wallets: NFC technology is what powers payments behind mobile wallet brands like Apple Payâ, Google PayTM and Samsung Pay.

It’s similar to Bluetooth but requires closer proximity and offers greater security. Here, customers can checkout online using their stored payment of choice in their mobile wallet, wherever the preferred app is accepted.

Digital Buzz

Digital wallets are, without a doubt, one of the most popular trends in payments right now. Why? The buzzword here is convenience. With this model, a customer can transfer funds to other wallets using simple identity verification methods such as email address or phone number, as opposed to complex account numbers, swift codes or international identifiers. The only requirement here is that both users have wallets within the same ecosystem and funds must still be onboarded in and out through the traditional ACH banking transfer system.

PayPal was the first brand to push the envelope here, but it has since been rivaled by competitors such as PAYM, AliPay and Banko. And if there was a goal in any of these business models, it would most definitely be to keep the funds within the ecosystem.

At the Pump

It only makes sense that we should touch on this too. After all, mobile has infiltrated this sector as well. But, first, a little history… The momentum for it all started back in 1947, when Frank Urich opened the first self-service gasoline station in Los Angeles that featured “rows of sparkling pumps and girls on roller skates who zoomed around to collect money and reset dispensers.”

So, not quite at the pay-at-the-pump stage yet but the self-service model paved the way. The first official pay-at-the-pump transaction would show up soon after – in 1973, to be exact, at a gas station in Abilene, Texas.

As for where we are today, we may not have the roller skates and our pumps may not sparkle, but we are fully invested in the self-fueling, self-paying service model. And mobile is, without a doubt, becoming a huge component of what makes transactions safe and convenient at the pump.

Beyond the Pump

Now, this is where mobile really hits its stride in the convenience retail sector…

“There is growing recognition in the petroleum industry that the auto has revolutionized all retailing—except the retailing of the gas station! It is even seeping into the awareness of this industry that car traffic is now shopping traffic, and that more cars, driven by men as well as women, stop at gas stations every day than drive up to any other outlet, including perhaps the

food outlet! No other retailer so completely wastes such a remarkable traffic count as does the gas station!” —Legendary advertising and marketing executive E.B. Weiss in the 1964 book, Management and the Marketing Revolution

And this is where we are today. Convenience retail stores have fully begun to capitalize on their “remarkable traffic count” in a plethora of ways that drive retail, accessibility and, most importantly, repeat business. And one of the major drivers for this is, of course, necessity.

As a brand that services both the oil company and the convenience retailer, P97 strives to facilitate innovative solutions that benefit both sides of the equation. While it’s true that the oil company makes their margins every time gas is delivered, the retailer makes a very small margin on gas alone. So, the win-win for both users here is to also create value-driven incentives to entice customers into the retail storefront and promote purchases there. In this model, both the oil brands and the retail storefronts are making their desired margins.

How do we do this?

A proprietary mobile app interface not only saves customers the trouble of having to dig in their wallet for their credit or debit card, it also presents the opportunity for any convenience retailer to enhance the customer experience and promote repeat purchasing with:

· Loyalty offers

· Geolocation perks

· On-site promotions

· More secure mobile payment options at the pump

And this ensures margins are made on both sides of the equation!

So, there you have it: The history of payments from the apple to the app, as well as a future-proof model for the convenience retail service sector. And as is the case with most everything in the world today, it all revolves around the accessibility and reliability offered by the mobile phone.

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