Recently we made a short review of the best mobile commerce apps and then decided to go further in learning about the usage of mobile phones for shopping. The launches of Apple Pay and CurrentC mobile wallet and the emergence of a new category of apps that can be used to make in-store payments without interacting with a payment terminal – all promising new developments in payment methods that are sure to make people start using their smartphones to pay for goods and services in stores.
As a result, it seems there is going to be an explosion in mobile payment volume beginning in the US and spreading around the world. Let’s observe 7 main trends of mobile payment development determined by BI Intelligence analysts that we consider important to be aware of.
Mobile payments will see explosive growth.
Mobile in-store payments will grow at a five-year compound annual growth rate (CAGR) of 154%, to $189 billion in 2018 from $1.8 billion in 2013, according to the BI Intelligence forecast. While the growth will be explosive, in-store mobile payments will still account for less than 4% of brick-and-mortar transactions by 2018.
A small percentage of people have already used mobile payments.
In late 2013, just 6% of US adults said they had made a payment in a store by scanning or tapping their smartphone at a payment terminal. That percentage will go up to 8% this year. Apple’s introduction of Apple Pay in the iPhone 6 line will be the key factor that will drive this percentage up.
Millennials are early adopters of mobile wallets.
55% of people who say they use mobile wallets are millennials – young people, aged 18 to 34. These mobile natives are likely to continue to drive mobile wallet adoption.
Android vs iPhone.
Among mobile payment users, those on Android devices make more mobile payment purchases, while iPhone users spend more on the average transaction. However, with the introduction of Apple Pay there’s a good chance iPhone users will soon surpass Android users in terms of frequency of transactions.
NFC vs QR codes.
NFC, which is used by Apple Pay, Softcard, and Google Wallet among others, uses an antenna built into the phone to interact with reciprocal payment terminal hardware. QR codes/barcodes are used by Starbucks, LevelUp, and MCX. Mobile payment apps generate a unique barcode, which is then scanned by hardware at the payment terminal.
Of the two leading in-store mobile payment technologies — NFC and QR codes — NFC will be the winner. Scanning a QR code or a barcode has been the top method for making a payment via smartphone in recent years because it can be done with Android phones and iPhones. But with Apple’s adoption of NFC for the iPhone 6 line, many more people will begin using NFC-based mobile payments.
Apple Pay will succeed in bringing mobile in-store payments into the mainstream.
Apple has a devoted fan base and the unique ability to change consumer behavior on a large scale. A majority of US tech consumers said they would absolutely use Apple Pay, according to a survey of Business Insider readers. In addition, the company has included a number of features within Apple Pay to address consumer privacy and security concerns.
Other mobile payment apps will compete for consumer attention.
The retailer consortium MCX is getting ready to debut mobile wallet app CurrentC, which could reach a huge number of customers who shop at giant retailers like Target and Wal-Mart. MCX merchants will apparently be barred from accepting Apple Pay in stores.
Phone-only payment apps offer an alternative type of mobile in-store payment, made without the need for payment terminals. Apps like TabbedOut and OpenTable allow consumers to make payments for goods and services in stores entirely within their phones.
Olesya Monyuk, Business Development Director at Stanfy: Mobile in-store payments will continue to grow as more businesses and consumers desire to go wireless when accepting and sending money. The fact that such giants as Amazon and Apple are getting into this business will help to promote mobile payments to the mainstream and could even make obsolete the traditional desktop-based systems that you currently see at your local retail store, restaurant or spa salon. Surely, this revolution will enable business owners to provide easier, faster and greater personalized service to their customers. And that is definitely cool, isn’t it?
With the expected growth of the mobile payments arena, every major player is vying to enter it. To keep your nose to the wind follow updates of our blog because in future articles we are going to talk more about the pros and cons of phone-only payment apps and what is most promising about Apple Pay.