Can Consolidation Bring Mobile Payments to the Masses? - eMarketer

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Can Consolidation Bring Mobile Payments to the Masses?

US proximity mobile payment transactions to near $9 billion this year

March 6, 2015

In late February, partners Verizon, AT&T and T-Mobile agreed to sell their cooperative mobile payments platform, Softcard, to Google. Softcard, formerly known as Isis, is set to shut down on March 31 and looks likely to see its software rolled up as a part of Google Wallet.

US Proximity Mobile Payment Transaction Value, 2013-2018 (billions and % change)

Consolidation in the mobile space may help make it easier for consumers and retailers alike to converge on the same service providers and platforms, a key ingredient toward mass adoption. eMarketer estimated in September 2014 that the value of payments that involved using a mobile device at the point of sale in the US would reach nearly $9 billion this year, up 155.8% over 2014, and that overall, 22.6 million people in the US would make at least one mobile payments transaction in the past six months. That would represent a 41.7% increase in the number of users and put penetration at 12.7% of smartphone users.

That’s still a tiny share, and by 2018, the end of our forecast period, we expect 27.0% of smartphone users in the US to make at least one mobile payment every six months.

Average annual spend per user is expected to rise much faster during that time period, from $219.79 in 2014 to $396.72 this year and $2,071.91 by 2018. The transaction mix will change from a plurality of low-dollar-value transactions in 2014 to a greater focus on medium-sized purchases of $20 to $200 starting in 2015, when such transactions will make up 42.9% of all mobile payments transactions. That will remain the dominant purchase category throughout the forecast period, with transactions for less than $20 falling to 16.1% of the total by 2018, when 26.5% of transactions will also involve more than $100.

Though the mobile payments market is clearly still in early stages, optimism has led players from many sectors—including the wireless carriers above that are now getting out of the game—to get involved. Research suggests that retailers are rushing to catch up with potential demand. Small-business owners are tentatively interested as well, and the UK is also showing signs of millennial interest in mobile payments.

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