So here are a few interesting stats to kick this off:
‘Invisible payment’ technologies, aimed at reducing or removing physical checkouts from the retail experience, will process over $78 billion in transactions by 2022, according to Juniper Research.
According to Worldpay’s 2018 Global Payments Report, mobile wallets dominate Chinese payments, unlike anywhere else on the planet. Almost two-thirds of eCommerce and more than a third of point-of-sale spend in China obtained through leading eWallets such as Alipay and WeChat Pay.
“We forecast that 938.2 million individuals—or 36.0% of smartphone users—will use a mobile phone proximity payment app in 2019, a 13.5% year-over-year increase.” Quote by eMarketer.
The 2018 GSMA State of the Industry Report on Mobile Money states that “processing over $1.3 billion a day, the mobile money industry added a record 143 million registered customers in 2018.”
According to a study from CCG Catalyst about mobile wallet usage, the compound annual growth rate for mobile wallets is a new 80%, between 2015 and 2020.
We could go on and on with this, but we feel like you get the gist. Mobile payments are not the future of payments. They are the reality in which we live today.
What does the future hold for our cashless payments?
What are the areas of improvement but also challenges for the industry as a whole?
Credit cards are a dying breed
Like in the case of any new technology, method or way, the old one needs to go away. Credit and debit cards have served us well for a long time, but it seems like the time has come for a change.
According to the 2018 Global Payments Report, the use of mobile payments is set to continue its meteoric rise and become the second most common payment method after debit cards by 2022. You can download the report here.
Mobile payments are faster, more convenient, and safer than the traditional credit card. Pulling your credit card out in public bears its own set of risks. What’s more important to focus on is the added level of security a mobile phone offers. Authenticating the transaction with your fingerprint, PIN, or facial ID is something you never had to do when using a credit card.
Amazon’s Go might just be the beginning
Remember how exciting and groundbreaking was the self-checkout station at retail stores? Simply walk up to the machine, swipe the barcodes, get your credit card out, pay and leave. Peak. How do you even top that?
Enter Amazon’s Go.
The retail conglomerate never fails to impress, and its new stores are no different. The purchase, checkout, and automated payment steps for a retail experience out of the matrix. The key to all of that? The phone.
Customers need to download the Amazon Go app and pick the physical items they like from the store shelves. The store’s cameras track the action and add the selected items on the phone app.
Using the phone as one of its cornerstones, Amazon is essentially creating the future of the retail experience. A place where you never have to queue, open a wallet, or worry about shoplifting. You pick up the items you need and, GO, just like that.
There is no friction, no resistance no waiting around.
While the idea and execution of this concept seem miraculously simple, the shift won’t happen overnight. As noted in a 2018 Paysafe report, 59% of US consumers use their mobile phone to look for better deals. Somewhere else while they’re in a store when 63% of them have security concerns about contactless payments.
Where there is a change, there is resistance, and where there is resistance, there is slow adoption. The Amazon-Go project goes to show the capabilities, the dynamic and potential of mobile payments. We often think of mobile payments in isolation. But the Amazon-Go use case is an excellent example of how mobile payments can play a crucial role as part of synergies in creating an industry-altering experience.
Mobile point of sale
To process digital payments, this seems like another wireless and convenient way for merchants. Not needing a centralized checkout location allows merchants to operate payment processing on the spot. Outdoor retail enterprises such as concerts, farmer’s markets, and food trucks can leverage this technology and make their business model more attractive and viable.
Business & government involvement
The market for mobile payment transactions is not limited to the consumer. B2B space and governments all around the world might be some of the most prominent players. Also Influencers in the development of this technology.
Look at the newest collaboration between Apple and Goldman Sachs on creating a credit card. In other words, this strategic move aims to drive even more users to operate Apple Pay, the company’s digital wallet and eventually turn them into mobile payment users only. From the Goldman Sachs perspective, the investment bank gets the opportunity to expand their customer reach and gain useful data on the habits, preferences, and payment information of their client-base.
The future of mobile payments is also in Smartwatches
Like in the case of Amazon Go, smartwatches and other smart wearables are products of the power and the future of mobile payments. According to GlobeNewswire, the wearable payments devices market is set to reach 1121.01 billion USD by 2026.
Such numbers go to show that mobile payments have created a domino effect. An entirely new set of payments systems associated with it. These different forms of payment are slowly yet steadily infiltrating the traditional banking system, disrupting the role and use of brick and mortar financial institutions.
Payments & Loyalty
In a world where metrics and data tell you everything, you need to know about trends. This particular trend is one to keep an eye on. Mobile wallet success and customer loyalty to a brand seem to have a powerful connection and correlation.
Integrating loyalty cards on mobile wallets seems to be a very efficient way of propelling customers to use their mobile as a means of purchase and payment.
Adoption & trust are the real challenges
The future might seem bright for the mobile payments sector. Things are not as easy as one might think. A survey conducted by Thales e-Security found 72% of the 2,000 Brits worry about the risks associated with using contactless payments or when paying for things through their smartphone.
How do you combat that? Apart from the continuous improvement of the infrastructure and security levels, educating consumers is critical. This 2016 TSYS report emphasizes how security and fraud protection would be the primary factors influencing consumers to use in-store m-payments. For mobile payments to infiltrate the market at more material levels, trust seems to be a deciding factor.
According to a 2017 study by Mintel, ¾ of consumers don’t see a legitimate reason to change their payment habits and choices. Only ¼ (27%) claimed they had any interest in using their smartphone as a primary method of payment.
In addition, another survey by Experian recorded that more than half (55%) of partakers prefer to use credit cards due to safety concerns.
As you can see, brands need to spend time, energy, and resources in educating their client-base. Concerning the safety of their process and how private and sensitive data bare no real threat for theft. The mobile payments technology has a lot to offer. However, before it does, consumers need to get convinced about its legitimacy, validity, and safety.