Consumers Will Spend $142 Billion Through Mobile Purchases by 2019, Forrester Predicts
In 2014, consumers in the U.S. spent close to $52 billion through mobile payments, and Forrester's US Mobile Payments Forecast expects that trend to grow rapidly, with spending via mobile devices reaching $142 billion by the end of 2019. Though remote mobile payments currently make up the majority of all mobile payments, in-person mobile payments are expected to become more commonplace soon and will, along with peer-to-peer mobile payments, contribute to drive the explosion of mobile pay.
According to Denee Carrington, former Forrester analyst and report author, remote payments were the first mobile payments to gain traction, and will continue to dominate in coming years. "Food services, such as mobile food ordering, and delivery and travel services, such as air and hotel purchase, will drive a significant portion of the growth," she says.
As remote payments become even more prevalent, Carrington writes that digital wallet providers will have to differentiate themselves in a "battle to win the mobile checkout." Though PayPal is the leader in the space, according to the report, new solutions from Apple and Amazon as well as "incumbents" such as Visa and Mastercard will soon pose a significant threat. PayPal is also leading the pack when it comes to mobile peer-to-peer payments, but with a predicted annual growth rate of 26 percent, Carrington predicts that competing solutions, such as Chase Quick Pay and Venmo, will have a key presence as well.
Over the next few years, the most buzz, according to Carrington, will be around in-person mobile payments. Mobile food ordering apps and transportation apps including Uber and Lyft are paving the way for wider adoption, but "Forrester expects merchants in categories such as grocery, restaurants, and dining (fast food, quick service, as well as table service) will take the lead on accepting and promoting mobile payment solutions that remove [the] friction of queuing, ordering, and waiting to pay," Carrington writes.
Because of recent data breaches at major corporations, many retailers will begin transitioning to new POS systems that accept chip-based (EMV) cards soon. Most of the newer POS systems will come with mobile payment functionality built in, which will speed the journey toward mainstream mobile payment acceptance. "As both merchants and consumers sort out the coming upheaval with card payments and are forced to adopt new payment behaviors, many will see mobile payments as a more simple and straightforward choice that is equally as—or even more—secure," according to the report.
For companies seeking an example to follow, Carrington recommends looking at Starbucks. Sixteen percent of Starbucks' transactions occur via mobile devices, totaling nearly seven million transactions per week, and the brand is the "leading example of marketplace success," Carrington says. Though leveraging the right in-person mobile payment solutions and strategies requires "tremendous investment and experimentation," Forrester is optimistic. In-person mobile payments alone will jump from just $4 billion in 2014 to nearly $34 billion by 2019, the report states.
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