In this ‘Fast Take’ we review the evolving space of mobile payments and the new consumer behaviors that are being witnessed at retail.
Fast Take On: Mobile Payments
MOBILE PAYMENTS LANDSCAPE
“Wallet... check. Keys... check. Phone... check.” For years, these have been the “don’t leave home without them” items. However, your pocket might soon become much lighter, as mobile phones become an increasingly accepted form of payment.
Mobile payments are set to grow globally by 38% in 2014 to $235bn (Source: Gartner, 2013).
The current mobile payments landscape is extremely fragmented, with startups, financial institutions, retailers, tech giants and manufacturers all trying to capitalize on consumer’s desire for portable payment options. In the US, though, there is yet to be one core platform dominating the marketplace, resulting in mobile payment adoption growing at a slower pace.
The UK and US currently lag behind the Southeast Asian markets, who actively use NFC and QR codes for payments and mobile commerce (Nielsen, 2013). However, the current rush of companies into the space means that this will fast become a hot topic.
GROWTH OF A CHANNEL
In recent years, much talk has been focused on near field communication (NFC) chips, which allow for secure contactless payment at short proximities using radio frequencies, and their integration into mobile handsets.
Launched in 2006, Nokia’s 6131 was the first handset to include an NFC chip. While major smartphone manufacturers like Samsung have continued to include them, Apple’s exclusion of NFC chips was seen as a barrier for NFC being the core mechanic for mobile purchase. Google Wallet, which is powered by NFC, has also struggled to create significant usage, despite 41% awareness and growing penetration among merchants (Nielsen, 2013).
However, the amazing success of Starbuck’s mobile payment application illustrates how everyday purchases through mobile could become common practice. Estimates show that 10M Starbucks customers are driving $1bn in mobile based revenue for the company from its new mobile payment application, driving other brands to enter the space (Business Insider
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