A new study from Juniper Research has found that the number of mobile wallets using contactless technology is expected to reach 200 million by the end of 2016, representing growth of more than 100% from the end of 2014.
The research found that while historic growth of mobile wallet usage was driven by P2P (Person to Person) services for the unbanked in developing markets, the launch of Apple Pay has prompted a hive of activity in the contactless arena. It argued that with public awareness of contactless heightened in the wake of Apple’s launch, competing services such as Samsung Pay and the forthcoming Android Pay would no longer need to seed the market.
Additionally, the research, Mobile Wallets: Contactless & Remote Payments 2015-2020, – found that numerous banks were partnering with Visa or MasterCard to implement own-brand contactless wallets using a cloud-based secure element.
However, the research observed that the MCX (Merchant Customer Exchange) Consortium had postponed the launch of its own contactless service, with several retailer partners now abandoning their ‘closed shop’ stance towards Apple Pay. Furthermore, the Consortium has not agreed terms with any leading card holders, citing the high transaction fees as a stumbling block.
According to research author Dr Windsor Holden: “By the time MCX launches, US consumers will have a choice of perhaps half a dozen other mobile wallet solutions, not to mention the fact that an increasing number will also have contactless payment cards. In addition, the reliance on store brand payment cards could ultimately be a fatal flaw for the service.”
Simon Black, CEO of the PPRO Group, believes that this heralds the beginning of a payments and commerce revolution. “Contactless technology is the missing link to the widespread adoption of virtual wallets. Once you are comfortable with waving your card to make payments, it’s a small step to waving your phone or your smart watch,” he says. “The benefits of the virtual wallet go beyond speed and convenience – no more receipts; all your spending itemised and categorised in an easy to use application; loyalty points captured automatically; booked tickets captured and stored i.e. no need to have the booking card present to collect tickets at the machine or box office.”
Black continues: “There is a payment revolution underway that will see consumers globally paying with their mobile wallet and driving Connected Commerce. Be it mobile wallets, virtual cards or biometric payments, the world of payments is transforming and cash can expect to slip further down the preference list over the coming years until it will eventually become obsolete by 2025.”