The mobile payments market is projected to grow at a CAGR of 33.4% from 2016 to 2022 and reach $3,388 billion by 2022.
Mobile payment refers to the payment for goods or services or transfer of money through mobile/smartphones. The mobile payment industry has evolved over the past decade with big brands entering the market and developing advanced technologies that provide the ease of payment using mobile/smartphones.
By mode of transaction, the market is segmented into short message service (SMS), wireless application protocol (WAP), and near field communication (NFC). By type of mobile payment, the market is bifurcated into mobile wallets/bank cards and mobile money.
Mobile wallet has high growth potential as it is a hassle free and cashless medium of payment. However, it is still a nascent market as customers are either not aware of its benefits or are reluctant to adopt the same. In a survey conducted by Accenture, nearly 52% of North Americans are aware about mobile payments, yet only 18% use them on regular basis. However, attractive offers such as cash back or discounts, have caught the customer attention, thus, propelling the market growth.
The need for a cost effective and convenient payment mode has led to the development of new and innovative mobile transaction technologies and mobile applications such as Apple Pay and Samsung Pay. Apple Pay launched its services through more than 2 million retail stores, which highlights the growing acceptance of mobile payment by merchants. This service is currently available in UK, Australia, US, and Canada.
Likewise, escalation in the usage of mobile phones in countries like India and China has encouraged service providers to provide for cashless payment options.
The growing trend of m-commerce transactions accounts for growth in the ecommerce transactions in the region. The increase in online purchases using smartphones has fostered the mobile payment market growth. Moreover, the greater affordability of mobile phones over other mobile devices such as laptops, and the increasing internet penetration have led to the growth of mobile payments market.
The mobile technology is becoming an important part of customers’ daily lifestyle owing to the ease it offers for making diverse transactions. Mobile payments market share is gradually rising owing to the increasing awareness of mediums such as mobile banking apps and mobile wallets in the Asia-Pacific. These medium provide ease to make payments for any goods or services from anywhere across the world.
Countries such as Singapore, Australia, and Japan are some of the major markets which are preparing to become a cashless market in coming years. Mobile payment transactions through NFC technology is also anticipated to witness robust growth in Asia-Pacific, owing to the convenience in payment coupled with government initiatives towards a cashless society. For instance, China UnionPay, a China based bank card association in collaboration with China Mobile, the largest mobile network operator in the world, has launched an NFC payment service in over 14 cities in China to capitalize on the growing trend of mobile payment, thus fostering the growth of mobile payments market in the region.
Change in lifestyle, and the need for quick and hassle-free transaction
Rise in disposable income, hectic lifestyle, and penetration of mobile phones coupled with increased internet usage has encouraged people and companies to opt for mobile transactions as it is quick and hassle free. For instance, Starbucks Corp. launched the Mobile Order & Pay Program across the U.S. to enable customers to preorder and avoid waiting in long queues.
Similarly, MasterPass, is a digital wallet by MasterCard which would enable customers to make online payments, in-app, and in store across its various partners.
Thus, to cater the rise in demand for easy payment by consumers, many established players have launched new and innovative mobile apps and wallets. Thus, fostering the mobile payments market growth.