KEY POINTS

  • We have revised our mobile-payments forecast significantly, based on important recent developments in the industry. We forecast US in-store mobile payments will grow at a five-year compound annual growth rate of 172%, from $5.5 billion in 2014 to $818 billion by 2019. That's equivalent to nearly 15% of US in-store payment volume by 2019. The launch of Apple Pay and a mobile-payments push from the largest US retailers has caused us to revise our estimate, which is higher than those of other research firms.
  • There are a variety of reasons why we anticipate mobile in-store payments will take off so quickly, among them positive sentiment toward Apple Pay among consumers and merchants, a clear mobile-payments technology winner in NFC, and consumers' love for loyalty and deals apps, which will be a component of most mobile wallets. One in four consumers who found a coupon on a smartphone, and went on to use it, redeemed it in a store rather than online.
  • Apple Pay shows signs of success. While it's too early to definitively call Apple Pay a success, there are indicators of momentum. Apple Pay had over 1 million cards registered in the first 72 hours after launch — a number that we forecast will grow to 70 million by the end of 2015. In addition, a number of retailers have seen their mobile-payment volume double since the launch of Apple Pay.
  • MCX has had hiccups, but it still has potential and will be another key driver of mobile-payments uptake. The retail consortium behind the CurrentC mobile wallet suffered from a firestorm of bad press after a number of its member merchants disallowed the use of Apple Pay in their stores. But when the CurrentC mobile wallet launches in early 2015, the dozens of retailers involved — which together represent over $1 trillion in payment volume and include Wal-Mart — are going to push it hard to their customers.
  • PayPal is at a crossroads and will soon push into in-store payments. PayPal is facing increased competition in online payments as it plans for a 2015 spinoff from parent company eBay. We think that in 2015 PayPal will double down on its efforts to get into brick-and-mortar stores. This will likely include the addition of NFC [...]