The Future Of Mobile Payments: What You Need To Know

So here’s 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 is made 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 cool 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 we already live in. What does the future hold for our cashless payments and what are the areas of improvement but also challenges for the industry as a whole? Let’s investigate.

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 them to be replaced. 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 but 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? Just 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 payment steps are automated for a retail experience out of the matrix. The key to all of that? The phone.

Customers just 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 just pick up the items you need and…go. Just like that.


Mobile payments are on the up and the future seems bright. Let’s have a look at where they are heading but also the challenges that lay ahead.

There is no friction, no resistance no waiting around.

Whilst the idea and execution of this concept seems 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 whilst 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 just 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 a great example of how mobile payments can play a key role as part of synergies in creating an industry-altering experience.

Mobile point of sale

Just another wireless, convenient way for merchants to process digital payments. 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. The B2B space and governments all around the world might just be some of the biggest players and influencers in the development of this technology.

All you have to do is look at the newest collaboration between Apple and Goldman Sachs on creating a credit card. 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.

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.

This goes 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.

Mobile payments are on the up and the future seems bright. Let’s have a look at where they are heading but also the challenges that lay ahead.

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 very strong connection and correlation.

Integrating loyalty cards on mobile wallets seems to be a very efficient way of propelling customers to use their mobile as means of purchase and payment.

Adoption & trust are the real challenges

The future might seem bright for the mobile payments sector but 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 key. This 2016 TSYS report emphasizes how security and fraud protection would be the primary factors influencing consumers to use in-store m-payments. In order 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, and only ¼ (27%) claimed they had any interest in using their smartphone as a primary method of payment.

Another survey by Experian recorded that more than half (55%) of partakers prefer to use credit cards due to safety concerns.

As you can clearly see, brands need to spend time, energy and resources in educating their client-base about 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 but before it does, consumers need to be convinced about its legitimacy, validity and safety.

Tagged as: Marketing, SEO, Blogs, Personas