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The practice of paying for things with a mobile device has failed to gain any traction in the UK over the past several years. While some contactless payment schemes have seen a degree of success—such as the Oyster scheme for London Underground—porting that behavior to mobile devices has been something of a harder sell. A huge degree of market fragmentation hasn’t helped.
However, September 2014 data from 451 Research indicated that there might be a brighter future ahead for mobile payments. It estimated that total mobile payment transaction value in the UK would reach $1.35 billion in 2014 and that the total would rise steadily to $4.34 billion by 2018.
The potential for this type of payment process is huge. Smartphone penetration in the UK will stand at 56.1% of the entire population in 2014, eMarketer estimates, yet the proportion of people using their devices to make in-store purchases is minute in comparison. According to May 2014 research conducted by Ipsos MORI for Deloitte, only 3% of feature phone or smartphone users had used their device to make a payment in-store.
Mobile payments is not a new concept, of course. Google has been in this space for some time with its Google Wallet offering, the Weve consortium—supporting transactions through a mobile wallet that links to customers’ debit cards—has been around for a while, and many other retailers and solution providers have been offering various types of mobile payment solutions, too.
This has all led to a very fractured market in the UK. Even with Apple recently joining the party, this still represents a platform-dependent offering and further fragmentation. However, several brands are about to join the mobile payments space under one umbrella. Zapp, a payment solution backed by several UK banks, will allow its partners to integrate the solution into their own platforms. The solution will launch in 2015, and several brands and retailers are already on board, including grocery stores and utility providers. If consumers continue to buy in to the mobile payments proposition, the market could be set for substantial growth in the near future.
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