Paying for items using mobile phones will become mainstream in the UK by 2016, according to a Forrester report commissioned by online payments firm PayPal. Almost half of UK consumers already use their phones to make purchases, with that proportion set to grow as smartphone adoption grows, according to the report.
“We’ll see a huge change over the next few years in the way we shop and pay for things,” says UK MD Carl Scheible. “By 2016, you’ll be able to leave your wallet at home and use your mobile as the 21st century digital wallet. 2016 will mark the real start of money’s digital switchover in the UK. We’re not saying cash will disappear entirely, but we’ll increasingly use our phones and other devices rather than our wallets to pay in-store as well as online.”
Predictions that consumers will make the transition from physical cash to digital payments within the next decade are not new, but Forrester’s research follows a string of changing estimates around the actual date of adoption. The Register cites recent ABI Research that pins the date to 2014 and predicts that Google Wallet, rather than an established service such as PayPal, will see the biggest consumer adoption. The key difference is that ABI predicts the adoption of mobile payments made using wireless, near-field communication (NFC) technology, while Forrester focuses on mobile payments more generally – perhaps because PayPal does not currently put a great deal of emphasis on NFC.
The question of who will dominate the mobile payments space still hangs over a battleground filled with players including operators, handset manufacturers who implement the relevant payments hardware, banking and card services who hold the financial details, internet heavyweights who provide innovation and tech muscle, and smaller startups finding their niche in the value chain. However, not all of these players are in direct competition, with many forming partnerships to help determine who plays what role within the payments process. Square, which makes use of a physical device to facilitate mobile payments, rather than NFC, claims that wireless payments hold “no value” for consumers. By contrast, card provider Visa has chosen to invest in the wireless payments space.
Meanwhile PayPal predicts that it will process USD3.5bn in mobile payments alone this year – compared with Juniper Research’s claim earlier this year that mobile payment transactions would total USD670bn.
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