In the UK, 46.4 million people own a smartphone. Statistics predict that by 2022, the number of monthly active users of smartphones in the UK will reach 53.96 million.
With numbers like these, it’s not difficult to see why there is constant discussion and a lot of hype surrounding mobile payments. What does the future hold for mobile payments, once considered to be a major disrupter?
Uptake slower than predicted
A new survey by ACI Worldwide shows that the UK is slower than other countries to adopt mobile wallet technology.
Fast growing economies in Latin America and Asia were quick to use mobile wallets, and they’ve already become the most used payment platform. The survey covered 6,000 consumers across 20 countries around the world.
The research shows that 17% of US consumers are happy to regularly use their smartphone to make payments. This up 6% on the previous survey in 2014. Over in Europe, Spain has the most active users of mobile wallets where a quarter use them regularly. Italy follows with 24%, then Sweden at 23% and the UK comes in at just 14%.
How to increase usage
Mobile wallets are far from dead in the water, with usage predicted to increase. However, the slower uptake does demand that providers should focus on features and service.
As with other technological leaps, consumers want seamless, easy service that doesn’t get in the way of their day. Several payment providers and retailers have been quick to spot the potential of mobile payments.
Starbucks, for example, now receive more than 20% of their orders and payment through mobiles. Kevin Johnson, Starbucks chief operating officer says: “The tremendous success of mobile order and pay has also created a new operational challenge in our highest volume stores that has been building for several quarters — significant congestion at the hand-off plane.”
Big players getting involved
Although slower to react than smaller start-ups, big retailers like MasterCard and Visa are getting behind mobile payment. Visa CEO Alfred Kelly said: “E-commerce enabled by mobile and other form factors is a significant opportunity, and we are definitely investing behind it.”
The Millennial market is by far the biggest users of mobile payments. Millennials are already tech educated, totally connected and using credit cards less than previous generations.
Almost half of Millennials have used mobile wallet payments. Rather than traditional payment methods like debit or credit cards, they’re going through PayPal, Amazon, Apple, Google or Square. These companies give them what they want – slick digital service, personalisation and the ability to tap into real time data.
Mobile payments set to grow
It’s likely that payment providers will work on finding ways to offer value to customers, including using innovative technology to offer loyalty programmes, real time discounts and push notifications.
Business Insider predicts payments will grow and eventually reach $503 billion. Other reports anticipate that 75% of all transactions will be cashless by 2025.
Approaching a cashless society
While cash is still king in many ways, it’s an inefficient way of doing business. It’s also inconvenient for consumers, with 40% of Millennials happy to give up cash entirely according to a 2015 study.
Countries across Europe are embracing this change with Denmark aiming to be cashless by 2030 and Sweden planning to dispense with cash over the next five years.
Cash has drawbacks when compared to mobile payment, including lack of security, no reward earning capacity and lack of convenience. Cash can’t budget for you, track your spending and help you live within your means. Digital money can provide services that go far beyond spending power.
Rise of near field communication technology (NFC)
NFC is used by the most popular mobile wallets including Samsung Pay and Apple Pay. It allows people to buy something by holding their phone up to a terminal. It’s super-fast and convenient and reduces time people spend in queues.
It’s technology like this that will lead to mobile wallets and payments becoming more widely used. Businesses of all sizes and most customers will continue to move away from carrying cash and plastic.
We’re not there yet, but it seems likely that a near-cashless society is an inevitability over the next couple of decades.
