The adoption of mobile payment apps and mobile payment platforms has rapidly transformed the industry, providing a plethora of market opportunity for current market participants and new entrants. Technological advancements as the major mobile payment trends have enabled significant growth of the mobile payments market to the extent that about 2.1 billion people around the world are currently using mobile payment services, and this figure is still soaring with staggering speed. Due to the numerous benefits that mobile payment can offer, this simple, convenient, and secure mode of transacting money is forecast to reshape the future of payments.
What is Mobile Payment and How Does It Work?
Mobile payment is a form of payment method where a user can initiate a transaction using a mobile device for goods and services through telecommunication networks or technologies. Mobile payment allows consumers to use a mobile device to pay for goods and services instead of using cash, check, and credit/debit cards. It is also known as the most convenient and secured payment mothed available in the market.
As the mobile payment trends continue to transform the future of payment, many of the world’s major tech and mobile companies such as Apple, Alibaba, Tencent, Samsung, and Android have already launched mobile payment gateways such as Apple Pay, Alipay, WeChat Pay, Samsung Pay, and Android Pay. The use of mobile payment will eliminate the need to carry credit cards and smoothen shopping transactions. More companies are also implementing mobile payments with their business. It can be costly, but obtaining a personal loan online is always a solid option for making the transition seamless into moible payments. Furthermore, as these technologies have high security against hacking, retailers will not be able to access the card information or security code illegitimately.
Suggested read: Mobile Payments are the Future of Global Business: Here’s Why
Global Mobile Payment Market Analysis
According the recent market research report from Technavio, the global mobile payment market size is expected to grow at a CAGR of close to 36 % by 2021. Additionally, between the years 2017-2021, the global market for mobile payments is expected increase more than USD 3 billion. Mobile payments are increasingly gaining popularity around the world, mainly driven by the technological developments and growing demand for easy payment systems. The market growth is further supported by the rising accessibility and penetration of the internet and smartphones. Meanwhile, constant improvement of security in mobile technologies has also encouraged costumers using mobile payment services and facilitated the engagement of banks and financial institutions to implement mobile payment enabled services.
A recent market report from GATE highlighted the rapid development of mobile payment trends that the number of mobile payment users around the world jumped from 1.6 billion in 2017 to nearly 2.1 billion in 2019, representing an enormous growth of nearly 30% in just two years. According to Worldpay’s Global Payment Report the use of mobile payments is set to continue its inexorable rise and is expected surpass the use of cash and credit card by 2020.
In terms of geographic regions, Asian Pacific will be the major revenue contributor to the mobile payment market through 2021. The growth of the m-commerce market and large customer base for smartphones and tablets will drive the growth of the mobile payment market in the region. China is currently the world’s largest mobile payment market, representing over 56% of the world’s market share. China’s WeChat Pay and Alipay are two of the world’s largest mobile payment platforms, they have over 1.6 billion accounts combined.
Top Mobile Payment Trends Shaping the Future of Payments
NFC Mobile Payments Set to Grow its Market Dominance
By mode of transaction, NFC mobile payments are set to become the dominant segment within the mobile payment market, leading the development of mobile payment trends in the near future. In 2016, the WAP segment held the majority share but the crown now belongs to NFC payments and according to Technavio’s latest research, NFC mobile payments will account for more than a 27% market share by 2021. The popularity of NFC mobile payments is owed to its ease of use and improved security options. Near-field communication (NFC) enables smartphones to exchange data and function as a payment device. It stores the customer’s credit card details and allows the user to pay at NFC POS terminals through smartphones. NFC mobile payments also help merchants attain operating cost benefits such as reduced cash processing and more effective consumer engagement.
Companies are increasingly NFC technologies into their mobile payment solutions to allow fast and easy payment. For instance, Apple has partnered with various financial institutions and launched NFC-powered mobile payment apps. Several Android and Microsoft-Windows smartphones have also adopted the NFC technology to aid contactless payments.
The emergence of HCE (host-card emulation) is one of the recent trends in the global NFC mobile payment market. HCE is an on-device technology that enables mobile or wearable devices to perform card emulations on an NFC-enabled device without relying on access to a secure element. The increasing popularity of HCE technology has encouraged banks to adopt these solutions as they have the ability to use security features provided by the inbuilt feature of smartphones such as fingerprint readers and iris scanners. This will further strengthen the leading position of NFC mobile payment in the global market over the next few years.
Download this report sample for FREE: Global Near Field Communication (NFC) Chips Market 2019-2023
Cloud-Based Mobile Payment Solutions are Rising
Cloud-based mobile payments services are witness strong adoption globally in recent years, making it another one of the major mobile payment trends in the world, mainly owing to the consistent innovations that allows consumer to conveniently use digital wallets. Cloud-based mobile payment solutions improve consumer convenience and makes the payment process simpler and easier by providing innovative options like simple-tap payment. The use of cloud-based services offers benefits such as flexible business models, secure environment, advanced tokenization, and less dependency with fewer intermediaries. This trend is setting up the mobile payment market to grow exponentially in the coming years.
One of the recent mobile payment trends of adopting cloud-based mobile payment is the payment for parking. For example, in San Francisco, the parking payment system provided by PayByPhone allows users to extend their parking time on its mobile app that also keeps track of time remaining and notify the user when the parking time is about to end.
Download this report sample for FREE: Global EMV POS Terminal Market 2018-2022
Multi-factor Authentication is Increasingly Adopted
The growing adoption of multi-factor authentication techniques is expected to aid in the growth of the mobile payment market in the future, as the users’ personal data and financial data will be better protected during the mobile payment transactions. Multi-factor authentication is a verification technique that uses two or more different authentication methods to prevent unauthorized access to financial details of the customers. This method utilizes various authentication techniques, such as smart cards, phone-based authentication, and biometrics technologies, to authenticate payment transactions on mobile devices.
The rising usage of mobile devices for financial and e-commerce transactions has also resulted in the innovation and integration of other biometrics technologies such as fingerprint recognition, voice recognition, iris recognition, signature recognition, keystroke recognition, and facial recognition in mobile devices. The integration of mobile payment technologies will ensure authorized access to personal data and prevent any fraudulent activity in monetary transactions.
M-commerce is Boosting the Mobile Payment Market
M-commerce is gaining wide acceptance across the globe owing to the several advantages it offers such as offering multiple payment options to consumers, streamlining the procurement processes, and proving better price choices due to stiff market competition. Due to these numerous benefits, Technavio has reported that the global m-commerce market will grow at a CAGR of more than 27% by 2020. The continuously rising number of smartphones users and high internet penetration have resulted in the increased popularity of m-commerce among consumers. The increased use of m-commerce is also boosting the adoption of mobile payment.
In addition to offering easy access to a variety of products even from remote locations, m-commerce also offers flexibility and easy payment services to customers. The adoption of cashless payments via mobile devices reduces the operational cost for m-commerce retailers and increases their revenue. Additionally, mobile wallets have much lower processing fee than card-based transactions and also enable m-commerce vendors to easily track and analyze consumer data. As a result, there will be an increased adoption of mobile payment among m-commerce companies, which will drive the mobile payment market growth in the coming years.
Download this report sample for FREE: Global M-commerce Market Report
Mobile Payment Through Wearable Devices
Mobile payment through wearable devices is another one of the top mobile payment trends in the global payment industry. Wearable payment is gaining huge traction in both developed and developing countries owing to the convenience offered by wearable devices to make contactless payments. The growing sales of wearable devices has also prompted several companies to install NFC POS terminals in their stores so that customers can make contactless payments.
Download this report sample for FREE: Global Wearable Electronics Market 2019-2023
The penetration of smartwatches is steadily increasing with several vendors launching low-priced smartwatches. Smartwatches are connected to smartphones through NFC, RF, or Bluetooth. The increasing shipment and revenue generated from the sales of smartphone compatible smartwatches will be a major factor driving this market’s growth. Major companies like Apple and Samsung are including components such as Bluetooth connect in phones so that users can use their smartwatches more efficiently. For example, Apple and Samsung have all launched their smartwatches which contain built-in NFC chips to provide users with hassle-free mobile contactless payment options.
Check this report for more information about global mobile payment market size, top mobile payment companies, and major mobile payment trends: