Researchers and payment industry pundits alike anticipate the growth of mobile payments for years to come. For example, one study conducted by Forrester Research projected a significant growth in the mobile payment market, from $12 billion spent in 2012 to $90 billion in 2017. Similar reports from other research firms such as Juniper anticipate growth as well.
So, why now? Mobile payments have been around for a while, but adoption hasn’t been the fastest. However, the times are changing and many industry experts suggest, given the way current trends are going, being able to accept these types of payments will be paramount in the very near future. There are a number of different factors that contribute to this line of thinking.
According to TechCrunch contributor Alberto Jimenez, it boils down to three major factors: supplemental services, cards on file and increased security.
Three factors driving mobile payment interest
Supplemental services refers to tools surrounding mobile payments that can contribute greatly to the value that mobile payments deliver. For instance, many mobile payments apps are tied directly to customer loyalty applications and services. This adds more incentive for customers to use mobile payments - not only are they paying for their goods quickly, they are also earning reward points automatically. Many existing reward programs can be tedious to use because people need to carry separate cards or paper punch cards to collect reward points, which is not the case when loyalty programs are done via apps.
Cards on file is an age-old service that many high-end retailers offer. Regular customers can leave their cards on file so they are billed automatically instead of having to show their card every time - think of it as starting a tab. Mobile wallets can work in a similar way, with an application allowing customers to pay for products at physical stores or even make purchases through other apps (think of services such as buying music digitally and downloading the files immediately onto smartphones).
Security has been a major problem for retailers in recent months, with many big-name merchants falling victim to security breaches. Although there are few mobile payment security standards in place, the fact that credit cards have proven to be vulnerable may be enough to get customers to consider utilizing mobile payments. Plus, many mobile wallets do leverage encryption technology, including tokenization, which helps protect customers and their sensitive data.
Mobile payments in the limelight
If those reasons are not enough to convince merchants, they only really need to look at the launch of the recent iPhone 6, which makes extensive use of NFC-powered mobile payments. The fact that such a popular smartphone finally has made mobile payments a centerpiece of its design may spur customers to check out what all the hype is about.
“This whole [payment] process is based on this little piece of plastic, whether its a credit or debit card,” Cook said at the iPhone 6 reveal event, as reported by The Verge. “We’re totally reliant on the exposed numbers, and the outdated and vulnerable magnetic interface - which by the way is five decades old - and the security codes which all of us know aren’t so secure.”
The number of reasons for customers to consider mobile payments are increasing day-by-day. Whether they choose to do so because it is the shiny new feature on their iPhone or because it is easier and perhaps more secure than a magnetic stripe, there is no denying that people are gradually showing more interest in utilizing mobile payments as a part of their everyday lives.