It has taken the extraordinary past few months for us to reach this conclusion: Mobile payment will explode! Not that we were pessimistic about the industry’s outlook earlier, but the recent developments in this space have re-shaped the landscape of mobile payments and will serve as catalysts for this explosion in the coming years.
Let us take a look at some of the developments in Q3 that have changed the outlook of the payments industry forever:
Apple Pay: Lot has been said and written about Apple Pay over the past month but this quarter’s assessment can’t be complete without its mention. 200,000 retailers across the US is a big number, and the security features that it brings with it boost the prospects of mobile payments for all stakeholders involved.
CurrentC: The retail outlets have been making a lot of noise over the last couple of quarters. In an attempt to steal the show, they announced CurrentC a few days before Apple’s announcement. It was announced by MCX, a consortium of over 70 of the largest retailers in the US. According to few sources, these merchants won’t accept Apple Pay. They have control over about 20% of total retail spending in US.
Popularity of in-app payments: It is a new category of apps that bypasses the payment terminal by allowing users to complete in-store transactions using only the handset. These apps promise to make the transactions software-only processes.
As a result of these developments, mobile payment will see explosive growth in the years to come. According to different estimates, the size of the mobile payment s market is between 1.5 bn to 2 bn. The numbers might well go beyond 100 bn in the next five years! However, in-store payment will still enjoy a very small share of this pie (typically less than 5%).
As of now, a very small percentage of the US population has actually used mobile payments (i.e. tapping or scanning the phone on a terminal). However, this number is set to grow in the coming years. The introduction of Apple’s mobile wallet will be one of the key factors that will drive its adoption.
Besides, millennials are the early adopters of mobile payments and they will continue to drive mobile wallet adoption in the coming years.