Half of Visa Europe payments to be mobile by 2020

Mobile payments - the future

Visa Europe forecasts that half of the payments it will process in 2020 will be mobile, expecting 2012 to be a springboard for its mobile payment and digital wallet services, which are set to roll out in the coming months. The credit card firm believes that the shift from paying with physical cards to using mobile payment apps on mobile devices such as smartphones and tablets, which has gathered momentum during the past year, will now accelerate, with credit card companies positioned to make the most of this growth due to their existing customer base. However, traditional payment providers are likely to face increasing competition as the market grows, with competing digital payment services from the likes of tech firms such as Google, consortiums such as Isis and dedicated startups such as Square also expected to start emerging into the mainstream.

Visa joined a host of companies in making a concerted push into mobile payments last year, launching its digital wallet service, V.me, in November alongside its contactless payments cards. The firm claims that there were 30m cards in circulation last year and expects this figure to hit 50m this year, as consumer adoption of mobile payments become increasingly widespread. Visa says that it is now preparing to launch an e-commerce digital wallet later this year, looking to straddle demand from consumers and enterprises for new payment options. The firm processed USD1.48 trillion worth of payments last year, up 14% from the previous year, and expects the margin between traditional credit card payments and mobile alternatives to continue widening.

Although analysts are forecasting huge growth in the mobile payments market, with estimates pegging the figure as high as USD670bn by 2015, the industry is divided over the speed at which consumers will adopt the services. Privacy is still a major concern, with 40% of those polled in a survey by Juniper last year saying they dislike the idea of sharing private information with third parties. Payments firms will still need to spend some time convincing consumers that they can provide adequate security protection, if the technology is ever to hit the mainstream. Credit card companies such as Visa will benefit from their existing user bases, arguably finding it easier to migrate customers organically to mobile than startups looking to recruit new users.

If anything, increased competition for consumer loyalty, and the growing number of payment options available could speed up adoption. US firm Square is already making major inroads into the space, claiming that it was already processing USD2bn worth of annual mobile payments in October last year. Having made a name for itself with its plug-in card readers, the firm now also offers wave and pay services with its Card Case app, allowing users to set up tabs with retailers and pay using pre-registered payment details. Meanwhile, PayPal is also segueing neatly from online payments to mobile, expected to become a dominant player in the space.

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