Mobile payments will see explosive growth. Mobile in-store payments will grow at a five-year compound annual growth rate (CAGR) of 154%, to $189 billion in 2018 from $1.8 billion in 2013, according to our forecast. While the growth will be explosive, in-store mobile payments will still account for less than 4% of brick-and-mortar transaction value by 2018.
- A small percentage of people have used mobile payments. In late 2013, just 6% of US adults said they had made a payment in a store by scanning or tapping their smartphone at a payment terminal. That percentage will go up to 8% this year. Apple's introduction of Apple Pay in the iPhone 6 line will be the key factor that will drive this percentage up.
- Millennials are early adopters of mobile wallets. Fifty-five percent of people who say they use mobile wallets are millennials (ages 18 to 34). These mobile natives are likely to continue to drive mobile wallet adoption.
- Among mobile payment users, those on Android devices make more mobile payment purchases, while iPhone users spend more on the average transaction. However, with the introduction of Apple Pay there's a good chance iPhone users will soon surpass Android users in terms of frequency of transactions.
- Of the two leading in-store mobile payments technologies — NFC and QR codes — NFC will be the winner. Scanning a QR code or a barcode has been the top method for making a payment via smartphone in recent years because it can be done with Android phones and iPhones. But with Apple's adoption of NFC for the iPhone 6 line, many more people will begin using NFC-based mobile payments.
- Apple Pay will succeed and bring mobile in-store payments into the mainstream. Apple has a devoted fan base and the unique ability to change consumer behavior on a large scale. A majority of US tech consumers said they would absolutely use Apple Pay, according to a survey of Business Insider readers. In addition, the company has included a number of features within Apple Pay to address consumer privacy and security concerns.
- Other mobile payment apps will compete for consumer attention:
- The retailer consortium MCX is getting ready to debut mobile wallet app CurrentC, which could reach a huge number of customers who shop at giant retailers like Target and Wal-Mart. MCX merchants will apparently be barred from accepting Apple Pay in stores.
- Phone-only payment apps offer an alternative type of mobile [...]