Prospects for the mobile commerce market on the world stage

From 2013 to 2016, the mobile commerce market grew annually by an average of 42%. At the beginning of 2015, the segment of mobile money, virtual currencies and e-wallets amounted to 10% of the total global volume of non-cash payments. With the growing number of terminals equipped with a chip for contactless payment, the share of payments using a smartphone will also grow. More about mobile trends in 2016 - in the review of the mobile payments market, which collects the results of research conducted at different times by 8 independent companies.

The segment, which includes mobile applications, e-wallets, mobile money and virtual currencies, at the end of 2014 occupied up to 10.5% of the total world market of non-cash payments (according to Capgemini). The main drivers of growth are:

• consumer adaptation to contactless and mobile payment systems in developed markets;
• attempts to modernize the payment infrastructure (as the EMV standard for bank card operations with a chip from Europay, Mastercard and Visa);
• introduction of instant payment systems everywhere.

People get used to ...

The popularity of the payment technology primarily depends on its speed, convenience, accessibility and security combined with a minimum of “headaches” for the user. User loyalty won by one service affects the growth of its trust in the entire mobile commerce segment. For example, users of electronic wallets are friendly with the ability to pay for purchases with loyal customer cards, transfers from card to card, payment for online services, personal financial assistants and other online payment options.

And yet, modern payment technology is fashionable. A survey of 11 thousand Americans and a panel survey of more than six thousand respondents conducted by Gallup showed that the level of engagement and the customer’s desire to feel special are important factors influencing the decision to use a new payment instrument.
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The level of engagement is important as a loyalty factor that makes users "brand ambassadors", their faces. Such people are emotionally attached, they try to use e-wallets at the first convenient opportunity. The survey found that 96% of Apple Passbook users planned to use Apple Pay over the next 12 months. On the other hand, 82% of people using other digital wallets, such as Alphabet (Google Wallet) or PayPal, chose to continue using them, also showing their loyalty.

A study of thousands of consumers, conducted by McKinsey, showed that the audience of users of electronic wallets is heterogeneous. Surprisingly, it is rather difficult to determine such standard indicators as age, income and smartphone usage. Instead, needs and habits better reflect a person’s interest in these payment instruments. They prefer fast payment (47% of people in this category use smartphones, of which only 15% are younger than 35). Online loans at low interest rates and P2P transfers are important for “mobile fans” (73% use smartphones, 47% are under 35) and loyal users of banking services (66% use smartphones, 32% are younger than 35 years).

But there is another important category that belongs to lovers of good deals (73% use smartphones, 32% are younger than 35 years old), for which bonuses, reliability, fast payment and digital goods are important. Therefore, an electronic wallet with these characteristics is likely to be positively received by the majority.

Ahead of the engine

Average annual growth rates of the mobile commerce market in 2013–2016 make up 42% (according to a PayPal survey, a sample of 17,600 consumers from 22 countries). The average annual growth rate of the entire e-commerce market is 13%. There are strong emerging markets that are leaders in terms of growth in the mobile commerce market: the United Arab Emirates, China and Turkey, where mobile shopping accounts for 24%, 21% and 19% of all online spending, respectively.

Representatives of generations who grew up in the era of gadgets, confidently use them to make purchases. 33% of respondents used their smartphones to make purchases. 64% of them prefer mobile applications over browsers because of their speed and convenience (instant confirmation, PUSH reminders). The screen size of a smartphone is a major deterrent to completing a purchase with these devices, since size affects usability.

To go, you need to run even faster!

The transition of the US to the EMV terminals, which allow to accept chip cards, is still in the process (Research & Markets, Near Field Communication, 2015). At the end of 2015, about 33 million merchants worked in the United States, four million of which generated 75% of transactions.

The earliest and most operational followers of innovation are the mass market, grocery stores and pharmacy chains, 60% of which have already switched to new technologies. Gas stations that have a two-year handicap, as well as fast food restaurants and small shops will move in this direction much more slowly.

One third of small online stores are not afraid of introducing chip cards into the market (Aite Group study, 2014). However, for large Internet merchants, the transition to EMV standards can be more problematic. The share of terminals adapted for receiving EMV / NFC cards will reach 73% in 2016 and 90% in 2017.

Instant payment systems

Banks cannot afford to ignore the changing world. Now that their customers have round-the-clock access to smartphones, banks must respond. Even the usual banking working day no longer fits into modern life.

There is a risk of erosion of brand value for banks, as customers will not use physical bank cards with a bank logo, using smartphones instead: just enter the PIN code and the program will do the rest for the buyer. The demand for speed forces banks to develop instant payment systems (IPS). Such a transformation of the banking sector, according to Accenture, will allow the government, business and users to win. The state will benefit from cash rejection and checks because of the simplified management of economic risks. Large companies, issuing a salary to the card, can keep cash on the balance longer.

The UK has advanced the furthest on the path to introducing a faster payment service. Australia and Singapore have also developed their own system called the New Payments Platform and FAST (Fast and Secure Transfers), respectively. The US Federal Reserve Bank is exploring opportunities to improve the quality of the payment system in the country. However, some banks do not see an urgent need for "accelerating finances." 49% of users believe that instant money transfer requires the development of instant notification and payment regulation, 36% agree to instant notification and package transfer (clearing) during the day (according to a Glenbrook Partners study). Another 15% of users will satisfy the notification and settlements the next day.

Conclusion

All signs point to the active introduction of electronic payment instruments in the next few years, and the leaders will be the ones who will not miss the moment and will offer users the most innovative solutions. Today we can observe a growing trend towards the collection of user data by retailers, payment providers, payment processors, banks and others. Data collection and analysis will become commonplace in the field of payments, since everyone is interested in delivering to the user exactly the service he needs.

Based on zacks.com . More information about e-commerce market trends and mobile payments can be found in our corporate blog. If you need a solution for accepting payments on the website or in a mobile application, please contact us, we will select a quality payment solution for your business and advise on all questions of interest.