While cash continues to be the bedrock of consumer transactions in the EU-7, mobile payments will almost triple over the next five years – at a CAGR of almost 23% – vaulting from $52 billion at the end of 2015 to $148 billion by 2021. And retailers need to take note as it is where the online and offline worlds will properly merge.
So says a new Forrester Data report, Mobile Payments Forecast 2016 to 2021, which advises that this growth is due to increasing consumer awareness and growing retailer interest in mobile payments, providing a positive backdrop for mobile payment growth.
Forrester’s research defines mobile payments as comprising of the following three types: mobile in-person payments; mobile remote payments, such as purchasing via an app when the consumer isn’t physically present with the seller; and person-to-person or peer-to-peer (P2P) payments.
The report finds that mobile in-person payments will grow the fastest. The proliferation of mobile devices capable of in-person mobile payments, coupled with the popularity of contactless payments and the number of mobile payment launches, will drive greater interest and traction.
This will increase almost fivefold between 2016 and 2021, from $4.6 billion in 2016 to $22.8 billion in 2021, accounting for nearly 16% of all mobile payments in the EU-7.
The study also goes on to show that mobile remote payments remains largest segment – and this is what should be of most interest to retailers. Mobile remote payments will see healthy growth over the next 5 years and will continue to remain the largest mobile payments segment by some margin. It is expected to grow at a healthy CAGR of 20%, and will account for two-thirds of mobile payments at the end of 2021. In-app and in-browser payment buttons will account for an increasing proportion of this.
“We expect mobile remote payments to remain the largest mobile payment segment by some margin,” says Forrester Analyst Shaurya Priya, the report’s author. “Why? Mobile remote payments provide real utility for retailers and customers. In-app payment buttons and online checkout buttons enable easy purchasing, without the need to enter payment details or delivery and billing options. As a result, retailers are seeing the benefits of increased checkout conversions and are integrating more payment options into their apps and mobile-friendly websites.”
According to the study, retailers are also offering more features like Starbucks’ “Order Ahead,” which allows users to bypass queues, or consumer-friendly services like click-and-collect. This blurring of online and offline retail is ideally suited to mobile devices, and we see an increasing number of people using their smartphones for online shopping.4 The EU’s second Payment Services Directive will enable retailers to offer customers direct-credit payment options, and we expect this to drive some growth in mobile remote payments as a result.
