Mobile payments will hit USD1bn in the US this year after slower than expected uptake from consumers over the past 12 months, but are expected to pick up and keep growing rapidly as the technology becomes more mainstream, reaching USD58bn by 2017. Greater penetration of NFC capable smartphones, combined with a growing familiarity with the technology among shoppers and mobile owners will drive this growth. The data comes from research firm eMarketer, which has scaled back its predictions for the year after the uptake of mobile payments proved lower than initially forecast. eMarketer had forecast mobile payments to surpass the USD20bn mark by 2015 but is now moving the milestone back to the following year.
Despite the surge expected over the coming years, 2013 is predicted to see growth of just 93.4% – down from the 225.6% growth seen last year. Growth next year is expected to be more solid at 148.6%.
There are a number of factors slowing the uptake of mobile payments. Firstly, the market is highly fragmented between competing e-wallets and technologies, with too much choice leading to confusion. With no run-away success in the e-wallet market, no service has emerged as a house-hold name with customers. Lack of awareness from consumers means despite the number of phones shipped with NFC capabilities rising 300%last year, few consumers are actually aware of it. The rise of contactless cards has also damaged growth with many finding them to be an easier and more familiar way to pay for goods using NFC than waiting for an app to load.
Part of the reason consumers are slow to adopt the technology, it that merchants are also dragging their heels, meaning that the pentration of point of sale NFC devices remains low. Many are instead opting for payment methods like Square, which use plug-in card readers to let shop owners take payments using mobile devices. Currently mobile payments are predominantly used to make small transactions such coffee, which is another factor slowing spensding growth.
While eMarketer’s report is limited to transactions that involve scanning, tapping, swiping or checking in with a mobile phone at the point of sale, e-commerce via mobile devices is on the rise. As consumers become more comfortable browsing and paying for goods on mobile, this is likely to help consumers become more used to the idea of making larger transactions with their devices. The technology has been held up by delays in merchant adoption but if big chains start using NFC, making it visible to consumers like Starbucks deal with Square, smaller retailers are sure to follow.
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