Mobile wallet spend to increase by more than 30pc this year: report
In keeping with the boom in mobile wallet adoption by both consumers and brands alike, a new report from Juniper Research claims that global spend through mobile wallets will increase to $1.35 trillion this year.
The Mobile Wallets: Service Provider Analysis, Market Opportunities & Forecasts study assessed the future of the platform from a global perspective, and found that while spend is currently concentrated in the Far East ad China (due to the success of Alipay and WeChat), international companies looking to penetrate the U.S. market will have to reckon with merchant-side developments from Apple and PayPal, the established leader in online payments.
“International mobile wallet companies like WeChat and Alipay certainly have the traction in a global market to contest PayPal’s 77+ percent U.S. market penetration — the big question is not if they will or are able to contest this, but when,” said Marci Troutman, CEO of SiteMinis. “With the current administration the U.S. market may hesitate to allow a significant penetration, but with a solid plan to nitch away at PayPal’s current penetration in full swing, and given the proposed number of visitors from China in 2017 to the U.S., a large bite could indeed be taken from PayPal in the next 8-10 years.”
The study also singles out PayPal’s decision to introduce an HCE (Host Card Emulation) NFC solution to enable POS payments as “a key disruptive moment in the wallet wars.”
PayPal has been laying down the infrastructure to be able to capitalize on the mobile payments craze this past year — all while enjoying huge boosts in mobile Total Payment Volume through its merchant-facing One Touch platform and social payments property, Venmo.
The report also claimed that 16.5 percent of U.S. smartphones made a contactless payment in 2016, meaning that PayPal and its ilk has plenty of fertile ground to convert over to mobile payments.
For all of its efforts in the mobile payment space, Juniper Research’s study awarded PayPal the “Established Leader” within its Mobile Wallets Leaderboard, which provides a comparative assessment of wallet providers including Alipay, Apple, Mastercard, Samsung and WeChat.
Future of mobile payments
The study claims that the majority of mobile payments transactions will involve physical goods (43 percent) and domestic money transfers, such as ones initiated through PayPal’s social payments service, Venmo (39 percent).
Bricks-and-mortar locations have also been getting in on contactless payments, however slowly the transition may be. CVS, part of a sector of retailer currently under threat from services such as Amazon Pantry, unveiled its own platform, called CVS Pay, a comprehensive mobile payment option that lives within the CVS Pharmacy application (see story).
And some data suggests that in-store payments have not yet caught on quite they way they were expected to: 90 percent of Black Friday transactions were made with regular card payments, damning evidence against a ubiquitously assumed mobile payments boom. It may be the case that consumers have not warmed up to contactless payments on security or convenience grounds (see story).
“By the year 2020 it is predicted that 90 percent of smartphone users will have made a mobile payment, while by this year, more than $60 billion is predicted to be made in mobile payment sales,” Ms. Troutman said. “With numbers like these and Venmo’s relationship with PayPal they are continuing to gain traction and revenue that will allow them to create an even greater growth plan in 2017 and beyond.
“With Venmo being popular with millennials and options such as the ability to split a check at purchase these growth plans do look positive for the company.”