Mod Blog: The future is bright for mobile payments

Daniel Kornitzer, Chief Business Development Officer, Paysafe Group

Increased mobile penetration and a growing level of consumer comfort with making payments through a smartphone or tablet continues to impact consumer spending habits across the globe. 

Increased mobile penetration and a growing level of consumer comfort with making payments through a smartphone or tablet continues to impact consumer spending habits across the globe.

In 2018 we surveyed consumers from Canada, the U.S., the U.K., Germany and Austria to measure the impact of this trend. The results painted a clear picture of how improved technology, changing consumer habits, and new regulation is reshaping the role of mobile in making card present (CP) and card not present (CNP) payments.

Nine per cent of consumers stated that they had made a purchase in-person using a mobile wallet in the past month. An equal percentage of consumers had made a payment for a good or service they received in-person via an in-app purchase.

Adoption of these types of payments isn’t slowing down. Here are three factors that will ensure mobile payments continue to be at the forefront of payment innovation for the foreseeable future.

The role of biometrics in payment authentication

mCommerce, even via a mobile-optimised web page or in-app, has often been clunky and delivered a poor user experience due to a lack of mobile native payment authentication processes. However, the introduction of biometric authentication through fingerprint technology or facial recognition is a significant upgrade in this area. This will be particularly relevant as VISA and Mastercard roll out their new 3D Secure 2.0 authentication process, of which authentication by “who you are” (biometrics) will be a key component.

Contactless payments are gaining momentum

The majority of contactless transactions are made using credit and debit cards, but consumers who have adopted mobile wallet technology are positive about its benefits, leading us to believe that we will see greater adoption moving forward. An overwhelming majority (84 per cent) of mobile wallet adopters said that paying using their mobile was more convenient than cash, and over three-quarters (77 per cent) agreed that mobile wallets were more convenient than contactless cards.

We expect to see the number of mobile wallet users rise sharply, as awareness of their benefits filter into the mainstream. Also 85 per cent of current mobile wallet adopters told us that they would be using their mobile wallet more frequently when making payments by 2020.

And whilst adoption of contactless technology in North America is generally much lower than in markets like the U.K., awareness of mobile wallets is more equitable. Four out of ten Canadians (42 per cent) and more than half (54 per cent) of American consumers have used a mobile wallet to make a payment, compared to 56 per cent of U.K consumers.

But perhaps the biggest driver of in-store mobile wallet adoption in 2019 and beyond will be the manner with which businesses are embracing the new technology.

We asked small and medium-sized businesses in North America about their priorities for improving the checkout experience. Increasing the number of available payment methods and improving the speed of the checkout were the key takeaways. The number of businesses in Canada and the U.S that accept in-store payment by mobile wallets is expected to increase by more than 100 per cent by next year, from a total of 29 per cent to 62 per cent.

Consumer appetite for peer-to-peer payments

Much as the adoption of contactless as a solution is facilitating more convenient commerce payments, consumers also now demand a secure, convenient alternative to cash when making payments to friends, family, or peers.

This is why demand for peer-to-peer (P2P) payment capabilities through digital apps has been a growing trend for a number of years, and in the U.S. in particular, with quarter-on-quarter payment volume growth exceeding 20 per cent for several industry leading providers in this area. It was predicted that 63.5 million Americans (32 per cent of smartphone users) made a payment on a P2P app in 2017, according to eMarketer’s research. This figure grew to 82.5 million users in 2018.

Industry commentators have predicted that the total transaction value of mobile P2P payments grew 37 per cent in 2018 to $167 billion, and this figure could rise to surpass $300 billion by 2021.

The Author

daniel-kornitzer_paysafe_headshotDaniel Kornitzer, Chief Business Development Officer, Paysafe Group

Daniel is Paysafe’s Chief Business Development Officer and is responsible for developing strategic partnerships designed to meet customer needs and grow new revenues. He has over 20 years’ experience in technology management. Daniel holds a B.Eng in Electrical Engineering from Ecole Polytechnique, a M.Eng from McGill University and a diploma in Network Engineering from the University of Toronto.