We recently explored the top 5 megatrends in mobile likely to affect your business in 2016, today we’re exploring mobile payment trends. By the end of 2015, Gartner predict that proximity mobile payments (point of sale transactions that utilise mobile as the payment method via gestures such as swiping or waving) in the USA will reach almost $9 billion. In 2015 consumers using mobile payments spent an average of $378 throughout the year. In 2016 the average spend will reach a staggering $722 per user.
2016 will be an enormous year for mobile payments. It’s predicted that in the USA alone, the volume of mobile payments will grow by over 300%. If your business is retail, mobile payments are set to change everything in the next 12 months and way beyond. It’s not just retail, mobile payments are affecting every area of our business lives. It’s estimated that in 2016 nearly 25% of all smartphone users will regularly use mobile payments (Gartner).
In the USA the value of these payments is likely to double. What we’re witnessing is a dramatic increase in the number of smartphone equipped consumers using mobile payments. In addition, the value of each transaction is set to increase dramatically too. Here are the top 5 mobile payment trends for 2016:
1.) Proximity mobile payments
It’s no secret that Apple are planning a major European push for Apple Pay in 2016. In some ways, 2016 could be a defining year for all things mobile payments. If Apple can execute the launch correctly, it could transform the entire mobile payments ecosystem. Given that Google is also highly active in terms of pushing mobile payments technology, it’s extremely unlikely that there will become a unified payments standard in this space any time soon. It’s likely that either Apple or Google will end up as the leader in mobile payments and the events of 2016 will play a critical role in determining what happens.
When it comes to mobile payments in 2016, we’re not just talking about smartphones, we’re talking about wearables, watches, bracelets and smart jewellery.
2.) Biometric authentication and tokenisation
In the next 12 months biometric authentication and ‘tokenisation’ are likely to have an enormous impact within the mobile payments industry. Tokenisation is likely to play a significant role as a means of securing credit card data as credit card numbers can be replaced by tokens. Tokenisation is effectively a process by which credit card numbers are stored on a secure server and tokens are used to implement the transaction instead of the credit card data. This is a fundamental step change in the way credit card payments are processed because if the tokens are stolen no actual damage can be done. This is how tokenisation will make the payment process more secure and dependable for consumers and businesses alike. At present, there is no industry wide standardisation for tokenisation but this is expected to change throughout the course of 2016.
In terms of payment process authentication there are many new innovations anticipated to emerge in 2016. There are a bunch of methods that are currently used to authenticate mobile payments such as fingerprint scanning, PIN authentication and password. Increasingly these methods are considered to be weak. As a result, authentication methods are shifting towards a twofold process in order to beef up security efforts. In 2016 we can expect to see a bunch of new methods emerging such as keystroke detection, voice recognition, pulse recognition and fingerprint scanners. These new features are anticipated to vastly enhance the payment authentication process whilst providing additional value and convenience for consumers and payment providers.
3.) International mobile commerce
If you’re a business involved with ecommerce looking to get into mobile, 2016 is going to be a big year. But getting it right is difficult and relying on a domestic strategy to generate sales will no longer be enough. In 2016, innovative and forward thinking businesses will require an international outlook in order to compete successfully. But broadening mobile commerce activity involves more than just organising logistics and enabling localisation by translating websites and mobile apps.
In order to be successful in mobile commerce, businesses will need to go way beyond simply offering consumers the opportunity to pay in their native currency. International territories such as Eastern Europe, Asia and South America are still relatively immature when it comes to overall card penetration and companies seeking to enter these markets will need to give alternative payment methods due consideration. Success in international mobile commerce will depend upon your ability to analyse foreign markets and gain a clear understanding of which payment methods are most frequently used in particular areas.
4.) Mobile delivery services
Delivery will become a huge concern in 2016. The popular trend in 2015 has been the ability to provide a next day delivery service. When it comes to shopping via mobile devices, consumer expectations have shifted significantly and businesses have been expected to follow suit quickly. In particular, from a consumer perspective, FMCG (fast moving consumer goods) are expected to be delivered quickly, efficiently and at the lowest possible cost.
This trend is not isolated to one particular sector. Mobile delivery is disrupting the food industry (check out Amazon Fresh if you haven’t already), transportation (Uber Rush), logistics and many other sectors. Instant delivery via mobile is no longer a ‘would like’ or a unique competitive differentiator. It’s now a ‘must have’ service offering and has become an essential part of the consumer experience when ordering goods and services online. if you’re a company involved with ecommerce, the big challenge will be connecting the mobile shopping experience with an efficient and timely delivery process.
5.) Ease of mobile purchase
Purchasing goods and services via smartphones and tablets is about more than just providing a mobile wallet. In 2016 new mobile payment methods are anticipated to emerge as a means of making online and in-store transactions as quick and seamless as possible. Making the most of mobile payments is about creating a harmonious link between hardware and software. As an example, PayPal recently announced a collaborative tie-in with retail giant Macy’s. The collaboration will enable both companies to develop an intuitive in-store payment system that works via the web.
It’s estimated that approximately 82% of mobile users will refer to their smartphone in-store when making a purchase. This means that retailers will need to find meaningful ways of connecting the online and offline shopping experience. What will happen in 2016 is that retailers will have to work hard to ensure that in-store transaction processes are directly related to the in-store and point of sale experience.
Earlier in 2015, Samsung Pay teamed up with SAP to launch a service called Vehicle’s Network. The system enables petrol stations to provide a seamless user experience by incorporating cloud based payment software into cars. This system will enable consumers to quickly and easily search for the closest gas station, establish the cheapest price available based on location and ease of access and wirelessly process the transaction via Samsung Pay.
If you’re a business looking to develop an app, it’s essential that you consider the profile of your target audience and understand which technologies they use before considering an investment. One way to taper mobile expertise and development knowledge into your organisation is to utilise a build, operate, transfer model.
Mobile payment trends 2016
So we’ve covered the big mobile payment megatrends for 2016. Proximity mobile payments, biometric security, mobile commerce, mobile delivery services and ease of purchase are all set to play a critical role in the ongoing and rapid evolution of mobile payments. The one thing that unites all of these trends is the focus on making payments easier for the end consumer via mobile devices. Mobile is driving massive disruption across diverse industry sectors and big companies that fail to keep up will fall behind. If you’re a business seeking a mobile app in 2016, contact Waracle today to kick-start the conversation.