Mobile Payments Examining the mobile payments industry and its impact on the financial sector TREND REPORT 2019 www.globalwebindex.com Contents Introduction Introduction 02 GlobalWebIndex Trends Reports take a deep-dive into the crucial topics of the industry, exploring some of the most Key Insights 03 pressing topics for marketers. In this report, we place the spotlight on mobile payments. The Evolution of Mobile Payments 04 This report explores: From APAC to the Rest of the World 09 • The evolution of mobile payments – how did mobile The Flourishing Opportunity in the West 13 commerce lay the foundations of mobile payments to arise and who are mobile payment users? Growth Challenges 18 • From APAC to the rest of the world – how does the The Role of Social Media 22 adoption of mobile payments differ by region and where does APAC stand out? Notes on Methodology 25 • The flourishing opportunity in the West – is mobile payment usage growing outside of emerging markets and in what ways? • Growth challenges – what are some of the obstacles still standing in the way of universal adoption? • The role of social media – how is the ubiquitous presence of social platforms pushing mobile payments to the mainstream? Key Insights Mobile payments have the opportunity to swell the This addressable market among newly-connected We’re seeing a substantial adoption growth ranks of online shoppers on a global level as more and financially underserved consumers inevitably in recent years in mature markets, especially and more fast-growth economies are looking to points the focus in growth potential to rural areas among Scandinavian countries. This shows that promote cashless societies. Usage of alternative of fast-growth markets. Steps towards improving mobile payments are no longer the preserve payment methods is rising not only as a response data connectivity within these regions are already of fast-growth markets and they’re increasingly to consumer demand, but also as a government taking place and are increasingly fueling this penetrating the Western world. The fact that prerequisite. growth. some of the commonly used services here, like Apple Pay, are native to particular mobile brands or operating systems emerges as a barrier to fully New digitally focused financial infrastructures Due to a complex regulatory landscape and issues pushing mobile payments to the mainstream. are being established, allowing those on the around domestic data protection laws, we’re The dependence on a relatively more advanced margins of the financial system to shop online. seeing established local payment services in technology than the QR code also helps explain These newly-connected consumers are carrying fast-growth markets strengthen their grip. This why they still lag behind Asia Pacific. the potential to disrupt the traditional banking means that international players like Apple Pay system as we know it. The positive impact on and Google Pay will not only need to combat usage figures will be followed by increasing these entrenched mobile payment players while Numerous indications of interest in developing consumer spending. But as with the case of Alipay expanding abroad, but they will also need to payment functionalities have been demonstrated and WeChat Pay in China, efficient distribution convince Western consumers and businesses of across many Western social platforms seeking to channels which display clear financial benefits the convenience and security of mobile payments. emulate the success of their Asian counterparts. in using these payment methods over cash As many social networks and messaging are crucial in changing entrenched consumer apps look to become service platforms, social spending habits. integrations have the potential to tap into vast user bases. Overcoming consumer reservations won’t be an easy feat, though. This is where education on the benefits and security of paying via social apps will need to be a key area of focus. Mobile Payments The Evolution of Mobile Payments Trend Report 2019 MOBILE PAYMENTS 05 The Evolution of Mobile Payments TREND REPORT 1998 1999 2003 2004 PayPal is founded. Thanks to Ericsson 34% of internet users Sony introduced a and Telnor Mobil, globally have made a contactless RFID mobile phones could purchase via mobile smart card system, be used to purchase in the past month. FeliCa, in Japan. movie tickets. 2007 2010 2014 2016 Both the iOS and the Square is launched, Apple Pay is launched, Mobile payments Android operating followed a year later followed a year later accounted for system are released. by the release of by Android and $75 billion. Google Wallet. Samsung Pay. Sources: https://techcrunch. com/2016/06/17/the- evolution-of-the-mobile- payment/ https://paymentweek. com/2019-2-22-paypal- digital-mobile-payments-to- be-100-trillion-market/ 2019 2020 2026 http://www.sbwire. PayPal CEO, Dan 90 percent of It’s estimated that com/press-releases/ Schulman, thinks smartphone users the market will reach focusing-on-new-trends- for-mobile-payment-market- the company could will have made US $457 billion. forecast-by-2026-with-major- process more than a mobile payment. prominent-key-apple-google- $100 billion worth american-express-company- mastercard-paypal-isis- of transactions. mobile-wallet-1159964.htm https://www.alliedwallet. com/blog/blog-posts/future- mobile-payment-technology/ MOBILE PAYMENTS 06 The Evolution of Mobile Payments TREND REPORT A key development underpinning the growth in online commerce But thanks to an aggressive bout of new market-entrants and wider in some markets has been mobile payments. According to the industry initiatives in bringing these services into the mainstream, Global Mobile Payment Market report, the market is projected to tools which allow consumers to pay for items via mobile either in- grow at an annual rate of 33% between 2019 and 2026, reaching US store or offline have seen impressive uptake in recent years – from $457 billion in 2026. 22% in the last quarter of 2015 to its current standing of 40% three years later. They are not only central to consumer convenience, but At the core of this phenomenon is the ability of these alternative also provide new revenue streams and valuable data to different payment methods to streamline purchasing processes. But, more industries and interested parties. importantly, they also bridge the gap between those who do, and those who do not, have the resources and infrastructure to pay So, what is the current state of the mobile payments market, what by other means. Given that today more people have access to groups are using these tools, and what obstacles currently stand in mobile devices (96%) than bank accounts (89%), it’s no surprise the way of these services? that established financial institutions, including central banks, are increasingly forming partnerships with mobile payment providers or developing their own services. The Rise of Mobile Payments % of internet users who have used their mobile to pay for “In the future, it will no longer be necessary to have an item/service in the past month a bank in the sense of a traditional, established bank. Mobile phones will become banks.” 40% 40% Arturo Herrera, Mexico’s deputy finance minister 37% 30% Although the history of electronic payments can be traced back to 28% 1997 when Coca Cola introduced vending machines in Helsinki that allowed payment via a text message, the launch of Square in 2010 20% 23% (facilitating the processing of credit cards on mobile phones), as well as the introduction of Google Wallet in 2011 are some of the most Question: Which of the following have you done on 10% widely cited examples of mobile payments entering the consumer your mobile phone in the past month? // Used your phone to market at scale. pay for an item/service? Source: GlobalWebIndex Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 2015-Q4 2018 Base: 2016 2017 2018 1,106,722 internet users aged 16-64 MOBILE PAYMENTS 07 The Rise of M-Commerce TREND REPORT Mobile payments have been on the scene for some time now, with Any online activity involving sensitive information such as digital one of the earliest examples coming from a type of Near Field financial transactions will inevitably invoke a sense of caution Communication chip installed in Japanese mobiles in 2004 known as among consumers to ensure a level of protection. And that’s why FeliCa. But it’s via the explosive growth of smartphone ownership that the perceived security features of PCs and laptops has meant that these services have been given the chance to flourish. these devices have largely held the reigns when it comes to online shopping or other financially-motivated behaviors. Perhaps most striking is the dramatic surge in the number of people who say their smartphone is their most important device However, when we turn our attention to online shopping, the mobile for getting online – 67% of online adults said this in 2018, with is the device of choice for 58% of online adults today, compared to the figure having increased by 35 percentage points since 40% who still use the desktop. This shows that consumer skepticism 2015. Simultaneously, PC/laptops decreased in importance by 27 concerning mobile security when it comes to payments is fading percentage points to only 21% in 2018. with time. Smartphone Importance The Rise of M-Commerce % who say smartphones are their most important device % who have purchased a product online in the last month for getting online PC/Laptop Mobile 80% 80% 68% 61% 57% 58% 51% 53% 53% 54% 55% 60% Question: