The media frenzy around mobile payments — most recently Apple Pay — has reached fever pitch and led some industry spectators to conclude that a payments revolution is at hand. Not so. The adoption of mobile payments is an evolution — not a revolution — and the evolution is well underway. Although the landscape of mobile payment providers is in an ongoing state of flux, the ecosystem and mobile capabilities are maturing and consumer and merchant adoption is accelerating.  Over the next five years, US mobile payments will grow from $52 billion in 2014 to $142 billion by 2019 with both national brands and local merchants.  Over the next five years, we can expect:

  • Consumers undergoing a mobile mind shift will create new mobile moments in commerce. Over the last five years, US consumers have adopted smartphones at a breakneck pace – growing from just 19% in 2009 to 66% in 2014.As consumers integrate mobile into every aspect of their lives, they are turning to their mobile devices to get things done wherever they are. Consumers are undergoing a mobile mind shift: “the expectation that I can get what I want in my immediate context and moments of need. Their increasing reliance on their mobile phones gives rise to higher expectations — it has ushered in the emergence of mobile moments in which businesses can find new opportunities to meet or surpass customer expectations in payments and commerce.
  • In-person payments will grow the fastest, but remote payments will remain the biggest. In-person mobile payments is currently the smallest category of mobile payments, but it holds the greatest growth potential.  The fastest growth will occur in verticals where friction is embedded in the commerce experience and with high-velocity merchants. Services represent 75% of US consumer spending and likewise services will also drive significant growth for both in-person and remote mobile payments.  Remote mobile payments was the first category to gain traction, it is currently the largest category and will continue to be so through 2019.  The battle to improve the checkout experience will intensify as technology titans, payment incumbents and disruptive new entrants joust for limited space in merchant’s mobile checkout flow.
  • 2015 will be the year of Apple Pay.  Apple Pay will influence every discussion of mobile payments through 2015.  It is already dominating the air space such that it is impossible for a conversation about payments and commerce to conclude without at least a mention of Apple Pay. Even senior executives at competitors such as PayPal, Softcard and CurrentC had to acknowledged Apple Pay’s impact on the marketplace in their keynote speeches at Money20/20 earlier in the month.  Apple Pay will motivate competitors to completely rethink their mobile payment strategies (PayPal + NFC, perhaps…).  Apple Pay will be the catalyst for new debates on balancing data privacy with customer engagement and loyalty.  Apple Pay will also be the standard-bearer for the best use of tokenization to secure payments and biometrics combat fraud.  In fact, the quest for security will dominate the US payments marketplace throughout 2015.

For more on 2015 payments predictions, including what to expect as the US migrates to chip-enabled cards (EMV) and the hyper-competitive mobile point of sale (mPOS) marketplace, see my new predictions report here. You can see our full list of Predictions 2015 reports here or contact us.

For more on the US Mobile Payments Forecast, 2014-2019, including a breakdown of the forecast by mobile payment category (in-person, remote and peer-to-peer mobile payments as well as mobile bill payment), see our new forecast.