Trends and Highlights in Mobile PaymentsLast 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.
- 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)