Let’s hop into a time machine and travel to the near future.
Everything we want and need is bought on an eBay-like mega-market and is delivered to your door. Your payments are zapped to each seller with zero transaction fees and in milliseconds. The money you pay with is a government-backed cybercurrency. The seller doesn’t know your name, and you don’t know hers. This doesn’t matter, since ironclad security has eliminated the risk of fraud.
It sounds like a science fiction, or some kind of shopping utopia, but these predictions bear a striking resemblance to breakthroughs happening today.
So says Professor Rabee Tourky, holder of the Trevor Swan Distinguished Chair in Economics at The Australian National University. He says innovations in how we pay for things will not only make the way we dish out dollars quicker and easier, but also help usher in the economy of the future. Heady stuff.
“We are living in amazing times where reality is catching up to these futuristic ideas,” he says.
The future is already in your pocket
Your mobile phone could be at the heart of this story.
Mobile technology is storming the payments sector, bringing us one step closer to the unobstructed, rapid-fire consumer experience we see in glimpses when we use things like debit cards, PayPal and BPAY. But we are yet to fully realise the potential here.
An example of how your smartphone is transforming into a wallet is the startup company ShopReply, which allows you to make quick purchases by sending an email, text message, or even a tweet from your mobile.
CEO of ShopReply Brad Lindenberg says smartphones are the future “by a long stretch”.
“Our entire platform is all about leveraging the mobile device to enable people to do things in environments where they previously couldn’t make the transaction,” says Lindenberg.
“You can buy something while sitting on your couch by sending tweets, and the next time you buy you don’t have to enter your bank details again. So you can buy out of a magazine or buy when you’re watching football on TV.”
Another excursion into this developing field is the Redy project being trialled in regional Victoria by the Bendigo and Adelaide Bank group.
During this trial, the residents of Heathcote and Charlton are able to earn rewards by purchasing goods on their mobile, and then donate the value of these rewards to charities or local community groups. Companies like CoinJar are also building mobile apps to enable buying and selling with the cryptocurrency Bitcoin.
Industry stalwarts like BPAY are already seeing a shift to these devices of tomorrow.
“In the last couple of years it really has been about the move to mobile, enabling consumers more control,” says CEO of BPAY Andrew Arnott. “We have seen a 60 per cent growth in the number of BPAY payments made on a mobile or tablet.”
The deep web
But these gadgets, with their flashy apps and swooshing speed, are really just the show ponies of the payments world.
The digital guts and gears of the payment machine, which springs into action each time you swipe a card, pay a bill or tweet a purchase, is overseen by the Australian Payments Clearing Association (APCA).
While high tech gizmos, websites and apps swirl above it on the surface, APCA plods along in the depths of the electronic banking world at a methodical pace, tinkering with the guidelines and computer systems that govern how and when we pay.
In years past, payments could take up to three or four days to be processed. Thanks to the work of APCA and its partners, payments are now pushed through the system in batches five times each day, rather than all at once on the following morning like they were up until last year.
And there are improvements to come. Right now, APCA is collaborating with the big industry players, including BPAY, to create a completely new payment system, which will work alongside the current, and much slower, direct entry system for the foreseeable future.
“What we want to do is build a basic piece of infrastructure that moves the money around really fast, and then leaves other people to design payment products on top of that,” says CEO of APCA Chris Hamilton.
“People are always attracted by the new,” says Hamilton. “They want to look at the new use of available technology. There’s so much technology around, that’s not surprising.”
“But that said, they also want their money to be very, very safe and their transactions to be very, very reliable. And so, we certainly wouldn’t ever want to put people in the situation where we were sacrificing on those things in exchange for being the newest and the sexiest.”
You control the change
Of course, companies and industry bodies aren’t solely responsible for the forward momentum. It takes the confidence of consumers, who simply won’t use these technologies if they don’t think they are safe.
“I think, pre-2002, people were a bit more skeptical,” says Lindenberg. “But once everyone started shopping on eBay and Amazon and PayPal, the Internet has matured and people are a bit more relaxed in who they’re dealing with.”
Surprisingly, Australia’s faith in the electronic payment system is unique in the world.
“The great bulk of Australians get paid whatever their regular income is straight into their bank accounts,” says Hamilton. “This is not true of many countries in the world, including what you would call First World Economies.”
This perception of safety is linked to one important fact: Australia’s payment and banking system is comparatively stable and speedy compared to the rest of the world.
Given this safe environment, which is fostering startups like ShopReply, it may be that Australia is well placed to be one of the epicenters of innovations in payments. So, stay by the phone.