Mobile Payment Evolution Is Underway
mobile proximity payments market.
Forrester also sees substantial growth potential for remote mobile payments—when consumers use credit, debit, or gift cards to pay for online purchases made via mobile commerce sites. This segment of the market should increase from $43 billion in 2014 to $91 billion by 2019, according to Forrester.
Also expected to see modest growth is the mobile peer-to-peer payments market, which Forrester predicts will expand from $5 billion in 2014 to $17 billion in 2019.
Forrester also expects mobile bill paying to reach critical mass by 2017. Today, 9 percent of mobile subscribers, or 26 million people, use their smartphones to pay their bills. That number is expected to grow to 19 percent of mobile subscribers, or 54 million people.
But with all that volume, Mulpuru and others are quick to point out that mobile payments still represent just a small drop in the ocean of total U.S. consumer spending. Forrester puts that total at about $16 trillion per year.
Nonetheless, $142 billion is hard to ignore, and many merchants are understandably struggling to make sense of the market—and to make it worthwhile for themselves and their customers. Forrester recommends adopting what it calls the IDEA cycle. It is composed of the following four elements:
- I-Identify the mobile moments, including opportunities to improve the experience by making it more convenient and enjoyable. This also involves knowing the customer and identifying his needs and motivations.
- D-Design the mobile engagement so the customers' needs and motivations align with and support business goals.
- E-Engineer the processes, platforms, and people for mobile technologies. This might involve changes to point-of-sales systems, store flows, pick-up and delivery processes, applications in place, and employee training.
- A-Analyze results, monitor performance, and optimize outcomes. This means ensuring that vendor performance and business metrics can be measured.
Outside of what any retailers might do, though, consumer interest alone could be enough to move the mobile payments market forward. In fact, 31 percent of consumers responding to a Timetric survey were anticipating an increase of up to 25 percent in payments through their mobile phones during the first half of 2015. Customers view time and cost savings and ease of use as the key drivers for payments through mobile phones, Timetric, a provider of market research products and services, noted in its "Mobile Payments: Emerging Trends and Future Outlook" report.