Inside the Cutting-Edge Payment Methods of the Future

Online shopping is changing more than the way we shop; it's also changing the way we pay.

As online and mobile shopping become more prevalent, the way we purchase products and services is getting an upgrade. Smartphones have already made some everyday technologies extinct, from the address book to the camera, and mobile payments are the next logical step in making smartphones our all-in-one devices.

Worldwide mobile payment transaction value topped $235 billion last year, and is expected to reach $507 billion in 2014. As a result, there's been a race to develop a mainstream point-of-sale (POS) terminal that will render credit card machines obsolete. We already have Apple Pay, Google Wallet, and Softcard, but that's just the beginning. Perhaps one day, you'll only need your face to make a payment.

Security Threats
The safety and security of mobile payments are of top concern to consumers and digital payment providers. Although it's getting better, trust is a major barrier to getting consumers to sign on, whether it's PayPal or bitcoin.

Credit cards continue to be the most popular mobile payment billing method, and PayPal still rules this market with 44 percent of all mobile payments. Still, mobile and other contactless payment transfer methods are a new subcategory of electronic money that lack recognized rules or standards.

Just over a year ago, MasterCard, Visa, and American Express proposed global standards for digital shopping. The plan would replace a traditional account number with a digital token for online and mobile purchases. The process is primarily intended for online shopping, but the standard could easily apply to digital-buying methods in brick-and-mortar stores, where owners would no longer have to worry about storing account numbers.

In the meantime, software companies are improving online verification in an attempt to decrease digital fraud. Signifyd, for example, approaches digital verification using a 120-factor checklist to confirm your identity, from your social profile to physical location. Signfyd verification of a credit card transaction, for example, can: track where the purchase is being made, noting your browser and physical location; verify your address and phone number; and match your email address and name to your Facebook, Twitter, or LinkedIn profiles.

Security factors become increasingly important as payment methods enter the wearable and contactless realms. ABI Research expects 10 million activity trackers and 7 million smartwatches to be shipped in 2014, a number that will likely grow in 2015 with the introduction of Apple Watch, which will support Apple Pay.

In Europe where contactless payments have taken off more quickly, usage grew 46 percent between December 2012 and March 2013, according to data from Visa Europe. In the U.K. alone, Visa estimates that Brits will make 500 million contactless payments between now and December 2015.

What type of technology will be taking our hard-earned cash? Read on to find out.

Innovation Comes to the Corner Store

Pay With Your Face
Uniqul is a Finnish company breaking new ground by allowing you to pay with your face. The system is still in its infancy, but the firm is leading the way with its patented facial-recognition system.

Uniqul requires no phone or wallet and essentially uses your face as a PIN number to authorize purchases. The system works with many existing payment processors, including Visa, Mastercard, American Express, and Diners Club, as well as modern alternatives like PayPal and Square.

Uniqul first picked up steam with a preview YouTube video last year, and in November 2013, the company said it would begin beta testing the payment system in select Finnish coffee shops in early 2015.

Pay With Your Emotions
Simplate is introducing a novel payment system that uses facial-recognition cameras to scan your face at checkout, take note of your emotions, and then offer up possible products for purchase based on mood and purchase history. "If you are an angry man of 30, and it is Friday evening, it may offer you a bottle of whiskey," Synquera told the New York Times. Created by Russia-based startup Synqera, Simplate users NFC-enabled bank or loyalty cards or NFC-enabled smartphones.

Pay With Social Media Currency
Your digital activities can now be converted into digital currency for vending machines with the Like Us Network. Gaining traction with funding from serial tech investor Mark Cuban, the company is on a mission to upgrade the standard vending machine payment process. Like Us Network hardware can be added to any standard vending machine to enable mobile payment with PayPal, Google Wallet, or a credit card. Buying happens via mobile website or mobile app, where various social incentives are also available.

You could, for example, trade a social media shout-out for a free snack or drink. The company is exploring other methods of rewarding social status and loyalty such as flexible product pricing, with lower prices offered to buyers with higher Klout scores. The Like Us Network isn't the only company contemplating the use of vending machines for creative digital payment methods. Smart Vending Machines by SAP are also in the works, which will track your past transactions, provide your payment history, and find custom offers based on your buying behaviors.

Pay With RFID Jewelry
A team of MIT students found a way to replace public transit cards with a wearable known as the Sesame Ring. The project earned more than $19,000 on Kickstarter last year, and allowed the team to develop, manufacture, and now sell customizable 0.6-by-0.6-inch Sesame Rings that replace Boston's public transit cards, called Charlie Cards.

The 3D-printed rings contain an RFID tag and can be refilled at a regular Charlie Card kiosk. To ride the T, simply tap your ring against the existing transit sensor to make your payment. The project is Boston-based, but the team plans to expand nationally and broaden Sesame Ring payment capabilities beyond public transit.

Pay With Your Watch
Smartwatches provide prime opportunities for digital payments, from Android Wear-based devices to the upcoming Apple Watch. Watch2Pay, in partnership with MasterCard, was one of the first watches built specifically for payment. The watch contains a prepaid MasterCard PayPass microcard, which is paired with a regular prepaid plastic card. Both the card and watch enable contactless payments at any location with a PayPass terminal.

Pay With Contactless Bands
From Disney World entertainment complexes to Hyde Park concerts, companies are launching a slew of contactless payment wristbands for group settings. PushCoin uses RFID wristbands to give attendees quick entry to events and easier payments options for parks, resorts, and schools. The battery-free, waterproof PushCoin wristbands allow for tap-and-go payments and tap-to-open capabilities, letting wearers tap to open hotel room doors or school lockers.

Disney World is even jumping on board with MagicBand, a wearable RFID device that unlocks hotel room doors; provides admission to theme and water parks; and connects to PhotoPass, Disney's digital stored image service.