Bitcoin is certainly on the rise, both as a means of monetary exchange, as well as an investment instrument. The value of the cryptocurrency has risen from an average of US$2:BTC1 in 2011 to a high of US$1,100:BTC1 in late 2013. The virtual currency is often beset with volatility, as it is easily affected by market forces. This includes being involved as the currency of choice of the online underworld — particularly the deep-web e-commerce service Silk Road. In the recent months, some governments, including China, Thailand and South Korea, have also banned the use and exchange of the currency.
Bitcoin does show promise, though. Even US Federal Reserve chairman Ben Bernanke has said that virtual currencies that promote efficiency, security and speed in transactions “may hold long-term promise“. Investors like Li Ka-Shing are investing not in Bitcoin as a currency itself, but in startups that offer Bitcoin services such as e-wallets and currency exchange.
Bitcoin is but one of the virtual currencies and payment method that is on the rise today. Various startups are addressing the need for more efficient mobile payment services, and some of these were even discussed at Echelon last year. Just how big is the mobile payments business, and what technologies will dominate this space in the coming years?
“Plastic is passé,” was the highlight of the CARTES Asia symposium in early 2013. This March, the theme of the smart technologies conference in Hong Kong will again delve deep into the mobile money technologies that are on the rise in the region. Michael Weatherseed, Director, Security Business Unit, Comexposium Group, the organiser behind the event, has shared some of his insights on the latest trends in mobile payments and electronic banking. Among the various interesting topics he threw light on, is the cyptocurrency Bitcoin.
Security and convenience
In the recent years, plastic card-based payment technologies have been superseded by the likes of PayPal, although startups such as Square and COIN have brought the plastic credit and debit card back into prominence. Other technologies, meanwhile, involve tap-to-pay through NFC chips and QR-code based payments (which is popular with Bitcoin wallets). Making things more complicated, Apple has long steered away from NFC technologies, and has instead preferred fingerprint-based authentication in its latest iOS devices.
Weatherseed says, “Apple staying away for the moment should not be a concern”; however, and this is mostly due to numbers. “Samsung has 40 per cent market share and offers NFC-enabled phones. This (Apple not supporting) will not be something that stops NFC, which is already widely used,” he adds.
Differing technologies are likely to co-exist, he says, with online and mobile services likely utilising a mix of different standards. For instance, “[I]n the CARTES Paris show in November, the ‘smart shopping’ area displayed all types of shopping experiences, including multi-service wallets, mobile payment terminals (MPOS), dematerialisation, smart labels and self-check-out in stores, as well as biometrics applied to payment methods,” he shares.
The mobile payments expert said that what is important is the combination of security and convenience offered by any single mobile payment product, which should offer advantages to both, the consumers and the entrepreneurs that work with these payment systems. “The best bet for this generation is a solution that combines security and convenience for the consumers, and improved business efficiency, cost control and competitiveness for the merchants,” says Weatherseed.
Bitcoin’s future unclear?
When queried about the relevance of Bitcoin, Weatherseed admits that the virtual-currency is “innovative”, but its “future is unclear”. He highlights the differences in attitudes by various countries and jurisdictions.
“It is volatile, it is anonymous, it is a way to pay, but bypassing state controls and taxation,” he says, adding. “Different governments have different attitudes — China and Thailand have banned it. The USA and Germany are ‘recognising’ it. The Central European Bank refuses to give it a legal status.”
Weatherseed admits that “this could change rapidly”, however, and poses three possible solutions: “self-regulation by the exchanges and the users, or a legal framework (but how many governments will agree), or a decision to ban it”.
He does agree that mobile payment systems — and startups that offer such service — are gaining traction in different ways across developed and emerging markets. For instance, micro-payments are seen as a viable alternative to cash in some places in Africa and Asia. Meanwhile, users from more affluent economies are still comfortable with using their bank-issued credit cards.
Points of disruption
But while mobile and peer-to-peer payments have been on the rise, “the mPOS sector seems to be the most popular target sector at the moment”, Weatherseed shared with e27, and the highlight would likely be on startups that offer mobile-oriented payments. In the region, such startups include Ayannah, Dragonpay, MOL, Pokkt, and even BlackBerry’s BBM service, among others.