The Mobile Wallet

Trends and Highlights in Mobile Payments

Last Updated:  Sept. 5th, 2014

 

TRENDS IN MOBILE PAYMENTS

  • Beacons: Barely on the radar a year ago, Beacons have now gained tremendous traction in the market.
    • The Beacons installed base is expected to reach a 287% compounded annual growth rate over the next 5 years.
    • By the end 2018, retailers are expected to employ approximately 3.5 million Beacons.
    • Retailers using Beacons with features such as indoor maps, location-based coupons, targeted product recommendations, and payment options, experience up to 16.5x increased in-store app usage and 6.4x increases in app user retention.
  • Near Field Communication: Although many feel near field communication’s viability has come and gone, the payment technology still boasts numerous big backers, including Google and ISIS Wallet.
    • Mass quantities of NFC-enabled phones are still shipped globally with approximately 400 million by 2014 and over 1 billion by 2018.
    • Merchants across the country will be updating their point of sales devices and payment terminals for NFC-enabled technology
  • Square Wallet, once considered a major player in the mobile wallet space, has recently been pulled by Square
  • 16% of mobile device owners have made in-store purchases with their phones as of early 2014, according to a March 2014 report from the Yankee Group.
  • 78% of respondents are interested in using their smartphones while shopping.
  • Beyond Payments: Mobile shoppers are focused on working with apps that allow them to:
    • Access coupons
    • View shopping lists
    • Track spending
  • 28% of respondents’ primary concerns with mobile transactions are security related — up from 20% in 2012.
  • Wendy's has begun it's nationwide mobile payment launch, with over 85% of its stores now accepting payments and the remaining ones will be updating their systems shortly.

  • While making transaction easier for the consumers remains a top concern for merchants according to a recent study by Kount, addressing the security concerns related to mobile transaction is now the primary concern for 28% of respondents, up from 20% in 2012.

  • Mobile-based transactions in the U.S. have grown 118% per year on average for the last five years.

  • At the moment the mobile wallet options available today are primarily based on one of two technologies, however there is a dark horse competitor that may make waves in 2014.

  • Starbucks processed over $1 billion in mobile transactions during 2013, processing over 5 million transactions each week during the 4th quarter up from 4.5 per week in May of 2013.

  • NFC is expected to grow 38% between 2011 and 2016, with the NFC market expected to reach more than $10 billion. 

  • By 2015, 630 million handsets will ship with NFC, this still only represents 40 percent of all mobile phones.

  • An emerging dark horse in the mobile wallet landscape is BLE. The BLE, or Bluetooth Low Energy, communications frequency has a range of up to 50 meters and has a number of interesting features that make it a potential disruptor in mobile wallets. BLE is already on over 200 million iOS devices in conjunction with Apple's iBeacon platform, and many Android devices also support it. 

  • 84% of consumers said they’re more likely to visit the website of a retailer with a loyalty program, 75% of consumers would switch brands if offered real-time discounts and promotions that were delivered to their smartphones while shopping, and 73% of smartphone users are interested in interacting with their loyalty programs through their mobile device

  • 50% of smartphone users predict they will use their mobile wallets by the year 2017.

  • Frequent smartphone use by shoppers actually leads to increases in total sales. When shopping for beauty products frequent smartphone shoppers see a median basket size increase of 50%. For appliances the increase was 40% from $250 to $350 on average when compared to typical smartphone shoppers.

  • According to Forrester, during the next five years, mobile payments* are expected to move toward the mainstream, reaching $90 billion by 2017. Predicted significant growth in proximity payments over the next five years will result in a dramatic shift in share with mCommerce dropping from a 90 percent share of overall mobile payments to 50 percent while proximity (in-store) payments will jump from a 4 percent share to 45 percent.

  • According to Intuit location based services, e-coupons, and mobile ads to become a $24 billion marketplace by 2015.
  • A survey from the Pew Internet and American Life Project showed 2/3 of respondents think most individuals will have fully adopted mobile payments by the year 2020.
  • Mobile POS proximity payments reached $640 million in 2012, an increase of 283% over last year's total. This number is further expected to increase another 234% by the end of 2013.
  • Proximity mobile payments are projected to grow significantly over the next five years, with an estimated 54.1 million individuals projected to leverage the technology by 2017.
  • In addition to the number of individuals using mobile payments, the overall volume in purchases is expected to see similar growth. In 2011 the average mobile payment user spend $61.00 on each transaction, this number is expected to grow to $1080.65 by the year 2017.

 

*Notables:

  • Forrester segements mobile payments into three categories:
    • Mobile Proximity Payments (in-store)
    • Mobile Peer-to-Peer (P2 or remittances)
    • Mobile Remote Commerce (mCommerce - buying online from a mobile device)