Payments for digital and physical goods made mobile operating system-based payments platforms like Apple Pay and Android Pay are expected to boom in the next few years according to new analysis.
The report from UK-based research house Juniper claims purchases made in-app and on websites via what it’s calling ‘OS-Pay’ (operating system pay) platforms will hit $8bn annually by 2018, a figure that is 15 times higher than the $540m estimated for this year.
The report attributes the projected growth to reduced friction for buyers on mobile, where manually entering personal payment details continues to be cumbersome. Features like thumbprint ID on Apple devices are significantly improving the experience for paying on mobile.
“It is clear that even in markets where PCs and laptops have a high installed base that the smartphone is playing an increasingly important role where remote goods purchases are concerned,” says research author Steffen Sorrell.
“For merchants, this means that the buyer experience must be made as frictionless as possible – from product search and discovery to purchase.”
A key inflection point will be when Apple Pay goes live on websites, expected later this year, and moves into a space currently dominated by PayPal.
This will be a significant move and one that will really drive adoption of Apple Pay in the digital payments space and create more competition in a space that PayPal effectively created and then dominated for years.
Juniper says that while it expects merchants to welcome the integration as long as it’s simple and rates are competitive, the entry of Android Pay will boost wider adoption of the technology for those that are skeptical of Apple.
Juniper says while these new mobile-OS-led entrants will pose a threat to PayPal in the West, it does not expect combined sales of Apple and Android Pay to come close to PayPal in five years at least.
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