Mobile payments usage has been slow to date, but that is about to change.
Next year, transactions from your favorite mobile wallets, including Apple Pay and the Starbucks app, are expected to more than double to reach $62.49 billion. That figure is projected to grow to $314.13 billion by 2020. There are a few reasons why consumers and merchants alike can expect to see a boom in mobile transactions in 2017 and beyond.
Mobile payments rely on Near Field Communications (NFC), a technology that allows two electronic devices to communicate with one another. When mobile payments were first rolled out, businesses lacked the appropriate point-of-sale terminals to accommodate this and were apprehensive to make the costly change.
The latest EMV security standards are inevitably what influenced their decision to invest. Retailers are now ordering new EMV-compliant terminals from major providers such as Verifone and Ingenico en masse and these often accept NFC payments via mobile wallets.
A major concern for consumers regarding mobile payments is security. A 2016 study from PEW found that only 6 percent of nonusers believe that mobile payments are safer than other payment methods.
Mobile payments are generally more secure than other forms of payment, including the standard credit card. The tokenized process takes the worry away from the traditional swipe because the actual credit card data is not transferred or stored on the retailer’s network. As merchants educate their consumers of the security benefits of mobile payments, adoption will surely follow.
Customer experience is central to mobile payments adoption. Today’s customers want to easily locate a product and purchase it via the channel of their choosing, for the fastest receipt possible. Mobile payments can make this checkout process seamless. Starbucks’ Mobile Order & Pay (MOP) app is a good example of success in this arena. It allows the customer to order his or her coffee ahead and pay with a quick scan of the phone. Launched just two years ago, it already accounts for twenty seven percent of U.S. company operated transactions.
There are several reasons why mobile payments have yet to gain traction. With wrinkles on the business and consumer sides, there is a general awareness component that has prevented mass adoption. Once both sides realize the safety and experience benefits, there will be no stopping this payment method of the future.