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Shoebox Phones to Electronic Wallets: The History of Mobile Payments

History of Mobile Payments

We eat with them. We sleep with them. We cradle them lovingly and make sure they’re protected. If someone takes them away, we experience anxiety and distress.

No, not our children.

Smartphones.

In a very short amount of time, these portable inventions have permeated the U.S. More than 75 percent of Americans – three out of four - own smartphones today, a sharp increase compared to 35 percent in 2011. They have changed the way we live, work, play, and communicate.

Smartphones also catapulted one of the most meaningful money-related innovations this century: mobile payments. As the smartphone grew in popularity and functionality, people jettisoned paper checks, money orders, and even cash in favor of digital options like in-app payments, ACH transfers and peer-to-peer payments. One touch of a button and – DONE! With the rise of mobile payments, it became infinitely easier to pay and get paid.

Likewise, businesses have adopted digital methods of payments, as well as the mobile apps that make them convenient, audit-ready, and secure.

How did it get so easy to pay with a smartphone? Here’s the history of mobile payments.

1973-1983

Martin Cooper, known as the “father of cellular phones,” busts out a shoebox-sized mobile for Motorola named DynaTAC. He makes the first cell phone call in which he brags to a competitor. Good use of minutes.

This isn’t the first portable phone invented. Variations of a portable phone – kin more to walkie-talkies - had been used on battlefields in WWII. Inventors started stuffing phones into cars soon afterward. Some of these contraptions weighed more than 80 pounds and cost the equivalent of $330 a month to run. They slimmed down over time, with a Nokia bag phone clocking in at only 20 pounds by 1982 – still much more massive than the DynaTAC. To be fair, consumers couldn’t buy DynaTACs until 1983.

1993

Nokia makes cell phones capable of exchanging short message service (SMS) or texts in 1993. Texts soon evolve into one of the earliest mechanisms for mobile payments.

That same year, IBM puts a perky “personal communicator” named Simon. It’s widely regarded as the world’s first smartphone. You could email, page, and fax with it. In return, it gave you an hour of battery life. This marked a strong departure from the call-only phones, paving the way towards smartphone dominance and the rise of mobile payments.

1997

Coke vending machines in Helsinki let you pay by text. It sure beats digging for exact change.

1999

Telenor and Ericsson offer a “mobile wallet” that lets their users buy movie tickets via their phones.

Also, this year, some European banks offer mobile banking. Banks in the U.S. follow suit in 2007.

2000

The first camera mobile phone is released for consumers. Next time you upload your card digits via a snapshot, send this .1 megapixel resolution marvel a mental thank you.

2002

Blackberry expands their PDAs to include calling, unleashing a product hardcore enthusiasts labeled “crackberries.”

2006

Frustrated with paying bills at the company he previously founded, financial technologist René Lacerte launches Bill.com. The service simplifies the exchange of payments and allows companies to pay and get paid digitally.

2007-2008

Apple releases the iPhone in 2007, the same year Google releases the Android operating system. In 2008, HTC launches the HTC Dream, the first smartphone running Android.

Also in 2007, a new way to exchange payments between users launched in Africa. Today, the service processes about six billion transactions a year for Africans.

2009

Almost two million North Americans make mobile payments. Worldwide, the number reaches 70 million.

2011

Google Wallet is introduced to the world to create “tomorrow’s shopping experience.”

2014

Apple announces the launch of Apple Pay.

A study finds that 39% of smartphone owners with bank accounts have used mobile banking.

Another report from the U.S. Census Bureau shows that almost 12 percent of e-commerce purchases in the U.S. were made via a mobile device in 2014.

2015

Samsung Pay is released, allowing users to pay via Samsung devices (including smartphones).

2016

Nearly 91 million North Americans take advantage of mobile payments. Across the globe, that number quadruples to 447 million.

The peer-to-peer payment exchange platform Zelle opens, which includes collaboration with 19 financial organizations such as JP Morgan Chase and Bank of America.

2017

Mobile payments total $780 billion worldwide.

2018

The Bill.com network moves more than $62 billion a year in digital and mobile business payments.

2021

A report predicts that e-wallet transactions will triple credit card mobile transactions by 2021.

Thankfully, it’s much easier these days for mobile payments. We’ve evolved past the 90-pound phones to a lightweight, highly functional personal rocket ships that fit snugly in hands, pockets, purses. With the numbers steadily growing, it’s likely we’ll continue to see mobile payments on the rise. After all, who wants to write a check or have to be at home (or in the office) in order to pay a bill or buy a shirt?

September 6, 2018
Konstantinos Giannakis
Director of User Experience and Mobile Product Lead
Konstantinos is passionate about building customer-centric products that help businesses focus on their growth. At Bill.com, he leads the company's user experience efforts across all product distribution channels and drives the company's mobile strategy.