Dive Brief:

• Mobile payment transactions will reach more than $314 billion in total value by 2020, up from just under $28 billion this year, helped in part by acceptance of in-store payments by a broader variety of retailers, as well as growing consumer acceptance of newer smartphone models, according to a new eMarketer report.
• Average annual spending per user employing proximity mobile payments is expected to increase from more than $721 this year to more than $1,230 next year, exceeding $4,133 by 2020. 
• Purchases ranging between $20 and $100 currently make up 52.2% of in-store proximity mobile payments in the U.S., eMarketer added, representing the first time purchases in this range have accounted for more than half of mobile proximity transactions.

Dive Insight:

Mobile commerce is getting to be a pretty big deal, as Black Friday just reminded us.

This particular eMarketer report has some interesting things to say in particular about the kind of mobile commerce occurring in physical stores, which currently lags that of mobile sales in retailer applications and other m-commerce categories, according to eMarketer. That sounds about right, because even as availability of in-store mobile payments seem to be expanding rapidly as all manner of retailers and banks join Apple Pay and other existing formats, usage of these payments apps remains relatively low and infrequent for now.

That's all about to change in the next few years, as eMarketer says mobile proximity will exceed online retail m-commerce sales made on smartphones by 2020. The rising cost per transaction is significant, as perhaps we are starting to see users of mobile proximity payments become a bit more comfortable using this payment method — not just employing it for a $5 coffee at Starbucks, but also using it to buy $75 worth of whatever from Target. Transactions in the range of $20 to $100 may just be crossing the 50% threshold now, but by 2020, eMarketer believes purchases in this range will represent about two-thirds of all mobile proximity payments.

E-commerce is such an influential growth engine in the retail sector that it is easy to forget that digital transactions still represent well under 10% of overall retail sales. Even by 2020, eMarketer says brick-and-mortar retail sales still will account for around 90% of overall retail sales. That, in a nutshell, is why mobile proximity payments have huge room for growth, and why a company like Apple jumped into that part of the market so aggressively before it started forging more partnerships with retailers to accept Apple Pay for e-commerce purchases.

As more consumers buy newer model smartphones that support mobile payments, and more retailers of every type start to accept mobile payments, that will mean huge days ahead for the mobile payment providers — but also some pretty big days for retailers who make the move to allow their customers to pay in whatever way they want.