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Mobile Payment Evolution Is Underway
Mobile spending projected to reach $1.42 billion by 2019.
For the rest of the March 2015 issue of CRM magazine please click here
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Consumer interest in mobile payments is high, but so far, very few consumers have actually used the technology. That is about to change, though, with adoption expected to triple in the next five years.

According to Forrester Research, U.S. consumers were on pace to make $52 billion in mobile payments in 2014. By the end of 2019, that amount is expected to reach $142 billion.

"As more transactions happen on mobile devices, mobile payments will naturally be a significant part of that," says Sucharita Mulpuru, a mobile and e-commerce analyst at Forrester.

Mulpuru also credits the "rapid growth" of m-commerce and Apple's entry into the mobile payments market with its Apple Pay mobile wallet application as catalysts.

Consumer comfort levels with the technology are also growing, especially "for low-value transactions with vendors that they trust," Mulpuru says.

Of all the ways that consumers can use their smartphones to pay for things, in-person mobile payments—using smartphones to make payments at retail point-of-sales terminals—have the greatest growth potential. Forrester expects these kinds of transactions to grow from nearly $4 billion in 2014 to $34 billion in 2019, with an aggressive compound annual growth rate of 56 percent.

For even more widespread adoption to occur, high-velocity merchants, such as Walmart and Target, and convenience stores, drug stores, and quick-service restaurants, will be instrumental, according to the Forrester report.

That change is already starting to happen. Lucky, Save Mart, and FoodMaxx in mid-January started accepting Apple Pay in their 217 convenience stores in northern California and Nevada. Save Mart stores also started accepting Google Wallet, Softcard, and several other smartphone digital payment methods.

Nicole Piccinini Pesco, co-president and chief strategy and branding officer at Save Mart Supermarkets, which owns and operates Lucky and FoodMaxx, said the move to accept Apple Pay is designed to help speed customers through the checkout line. "Accepting Apple Pay provides shoppers a secure and private way to pay for their groceries, and we've added support for this new mobile payment method solely for their benefit and convenience," she said in a statement.

Retailers can also increase adoption by tying coupons and loyalty programs to their mobile payment platforms, according to Gilles Ubaghs, senior analyst for financial services technology at Ovum.

Ubaghs calls the application of loyalty rewards and benefits via the digital wallet "the killer app" that will help finally ignite the slumbering 

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