Mobile devices are edging closer to fulfilling their long-delayed promise as digital wallets.
Consumers are beginning to see the advantage of channeling offline payments through their mobile devices, rather than carrying around clunky coins and cash — even debit and credit cards.
We think mobile payments are poised for takeoff, for three main reasons:
- Increasing smartphone penetration in major global economies.
- The large-scale adoption of tablets and smartphones as registers on the merchant-side. Many mobile payments market estimates miss the fact that small businesses and enterprises are adopting mobile for point-of-sale tools. Merchant-side adoption fuels transaction value growth.
- The increased convenience, for merchants and consumers, of mobile payments services, which are nearing "convenience parity" with credit cards and cash.
The debate over specific mobile payments technologies might rage on for years — between software-based solutions like Square, and the hardware-dependent Near-Field Communications, or NFC technologies. We've covered that debate in previous reports.
(For an explanation of the main types of mobile payments solutions, we recommend reading our explainer first.)
But consumers are primed to go wallet-free and begin paying for goods and services via their mobile devices. Here's our forecast:
- By 2017, the total value of global offline transactions facilitated by mobile devices will reach about $1.5 trillion, up from $120 billion in 2012.
- In the U.S., transaction value will rise to $244 billion in 2017, from $15 billion last year.
- The number of mobile payments users globally is set to explode as well. By 2017, the total consumer user-base will climb past the 500 million mark. That will be more than a five-fold increase from the less than 75 million consumers who used mobile payments at year-end 2012.
- In the U.S., there will be 60 million mobile payments users by 2017.
In this report, we will key in on some specific trends that helped us shape our outlook for the mobile payments market:
- User concerns about security around mobile payments have tapered off in many markets, particularly in the United States.
- In the next few years, mobile payments growth will be driven [...]