Enabling Technologies

APAC to Lead the Global Mobile Payments Market

MEDICI

While online lending went from one of the most funded segments rich with competition to the one getting hit, mobile payments are still as hot as they have never been. Increased shipment of smartphones combined with the flourishing mobile wallets market, change in consumer habits and growing retail acceptance—mobile payments seem to have all stars lined for success. To enhance and support the trend, developed economies have the device penetration and the infrastructure in place.

In 2015, US mobile payments transactions reached approximately $8.7 billion. According to some predictions, mobile payments are expected to reach $142 billion by 2019.

As for 2016, the total mobile payment transactions are expected to reach $27.05 billion, with users spending an average of $721.47 annually. The total mobile payment sales will rise faster than average spending per user in 2016 because of the growth in the number of overall users of the technology. And there is no lack of innovative solutions to ensure the rapid growth and success of mobile payments adoption.

Since the global mobile payments market is on the rise, international tech and telecom giants are focusing their attention on updating the manufacturing capacities and wires to meet the demand. In fact, Nokia, the largest smartphone manufacturer globally controlling almost 40% of mobile phone market, focused efforts on manufacturing devices with pre-installed NFC chips. Needless to mention, Apple and Google have been arming their devices with NFC capabilities for quite a while already. Telecom moguls T-Mobile, Verizon and AT&T have joined hands long ago in a collaboration to launch a mobile payments service.

Although mobile payments are taking off globally with some estimations predicting them to grow at a CAGR of around 36% by 2020, certain markets are expected to witness higher growth rate than others. Analysts from business consulting company NOVONOUS believe that the factors to facilitate such a significant growth include increasing penetration of mobile payments in various sectors, increase in analytics services and availability of affordable solutions and services to end-users. The APAC region is expected to be leading in terms of revenue in global mobile payments hitting 37% CAGR by 2020.

Adyen’s recent report on mobile payments index indicated that over a third of online transactions are now made through mobile, with Asian payment methods such as Alibaba-backed Alipay driving growth.

International Data Corporation (IDC) connected the region’s leadership in mobile payments with rising levels of mobile commerce as emerging nations come online for the first time and witness an internet boom via smartphones. In addition, the limited state of credit/debit card adoption in APAC will force potential mobile payments behavior to shift to using bank account-linked mobile wallets.

As Shiv Putcha, Associate Research Director at IDC APAC commented, "Smartphone adoption has grown much more rapidly than general banking and card adoption in the Asia-Pacific region. The recent focus on financial inclusion policies in various countries has given a boost to connecting the unbanked. This phenomenon, coupled with the innovation of semi-closed wallet schemes linked to bank accounts, has given a major boost to mobile payments in Asia-Pacific."

Not only is the APAC region leading the global mobile payments industry, it is a hotspot for FinTech investments overall. Last year, the total investments in the industry quadrupled, reaching $4.3 billion. China has attracted a significant part of the total investments – almost $2 billion. In Q1 2016, FinTech investments in the APAC region have grown by more than 500% compared to the same period last year (from $445 million to $2.7 billion). China is reported to be almost solely responsible for the growth.

MEDICI Team

MEDICI

MEDICI Team is a group of content writers, bloggers, journalists, researchers, and editors from the MEDICI team who collaborate to create FinTech insights.

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