Those who decide to ignore mobile payments are likely to see a loss of revenue and an erosion of both brand equity as well as customer loyalty, says PricewaterhouseCoopers (PwC)
Mobile payments made through smartphones and other mobile devices are among the biggest revolutions in financial services, says PwC in its latest report. Consumers are using them for banking, online shopping and, increasingly, making purchases at the checkout. It has been projected that mobile payment volumes will reach $214 billion within three years. In fact, about 10% of the $2 trillion in small cash transactions – those involving $25 or less – eventually could move to mobile.
PwC estimates that this will put more than $20 billion in play for the financial services industry – through both new revenue opportunities and avoiding potential losses from the defection of customers. The revenue opportunities include new fees from mobile spending… the conversion of small cash transactions to mobile payments… and new, value-added services, such as mCommerce, mobile ads, mCoupons and virtual currencies.
Three things that drive the use of mobile payments usage
Mobile payments are new, a service on the rise, but there are ways to promote them and encourage users to use them even more.
Users are more likely to convert to making mobile payments once they have tried them for the first time and experienced them for themselves. But to drive the first trial, customers need to be properly incentivized. One way is bundling mobile payments with loyalty points, i.e. giving customers more loyalty points when they are using mobile payment options. Other methods may include providing a tangibly better overall shopping experience with advantages such as shorter waiting times for mobile paying customers.
Rewards have the potential to drive an increase in mobile payments. They are attractive both for existing mobile payment users and novice users. Existing users claim they would increase their consumption if they were rewarded, and also be more inclined to give their personal information if it would bring them some kind of a premium.
Exposure to the repeated process of making mobile payments makes users more familiar with it, which, in effect, leads to an increased sense of security; and when feeling safe and confident, users are more likely to do more mobile transactions.
- Digital payments are expected to rise to a whopping $4.7 trillion by 2019 according to new research released by Juniper Research. This is a near doubling of the 2014 forecast of $2.5 trillion in digital payments.
- China’s eCommerce giant Alibaba expects to see a sales increase from 1,841 billion yuan ($295 billion) in 2013 to a mind-melting 3,790 billion yuan in 2016 thanks to more Chinese shoppers deciding to get their purchases online. This estimate puts the eCommerce market in China at more than the nominal GDP of Sweden or Switzerland in 2013.
- Industry predictions say that the next-generation biometric market, including face, fingerprint, iris/retina, voice, vein, signature, palm-print, and DNA recognition, will be worth anywhere between $5 billion and $23 billion by the year 2020.
- Shopping on mobile in China will grow 91% from 2013 to 2014 thanks to almost two thirds (69%) of Chinese consumers purchasing a product or service through their smartphones (compared to 46% of US consumers). The growth on mobile will slow down between 2015 to 2018 as eCommerce gets closer to saturation point.