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Over the past few years, the use of mobile devices for financial activities has expanded from simply checking an account balance to include other types of transactions, such as proximity payments and peer-to-peer (P2P) fund transfers.
Millennials have pioneered the adoption of both mobile banking and payments, but adoption is also rising among older adults, according to eMarketer’s latest report, “US Mobile Banking and Payments: eMarketer’s Estimates for 2016-2021.” (Subscribers to eMarketer PRO can access the report here. Nonsubscribers can purchase the report here.)
eMarketer estimates the value of US proximity mobile payment transactions will total $49.29 billion in 2017, up 78.1% from last year. Though the growth rate will remain in double digits through the forecast period, it will slow down to 23.9% in 2021. That year, US consumers will use their mobile phones to pay for $189.97 billion worth of goods and services at a physical point of sale (POS).
The average annual spend per proximity mobile payment user in the US will reach $1,026 in 2017, surpassing $1,000 for the first time. That figure will continue to grow through 2021, when it will reach $2,646.
eMarketer defines a proximity mobile payment as a POS transaction made by scanning, tapping, swiping or checking in with a mobile device. It excludes purchases of digital goods on mobile devices, purchases made online via mobile devices and purchases made via tablets.
The slowdown in growth is partly due to particularly strong increases in proximity mobile payment use seen over the preceding two years (annual growth surpassed 165% in 2015 and 183% in 2016). In addition, 2015 was the first full year of Apple Pay activity in the US and also the launch of Samsung Pay. Google’s Android Pay also relaunched that year, with all three services boosting transaction value growth in 2015 and 2016.
US consumers are not as likely to use proximity mobile payments to pay for big-ticket items. eMarketer estimates that items costing more than $100 will account for 19.7% of US proximity mobile payments in 2017—a figure that will decline to 14.6% by 2021.
Meanwhile, new data shows that US consumers are using their phones at the POS to pay for coffee, fast food and other low-value, high-frequency purchases at a growing rate. As a result, eMarketer has raised its estimate for the share of low-priced items—defined as under $20—to 27.5% this year. The low-priced share of proximity mobile payments will grow slightly and reach 28.2% in 2021.
Despite this, medium-priced products like gas and groceries will continue to make up more than half of US proximity mobile payments through the end of the forecast period.
P2P mobile payments—which eMarketer defines as a transfer of funds from one individual to another using a mobile phone—are expanding rapidly, due in large part to new players entering the market. One of those services, Zelle, is likely to attract older consumers, who have been slower to take to P2P transactions. Venmo, which spearheaded growth in 2013 and remains especially popular among millennials, continues to grow its user base.
eMarketer estimates the value of P2P mobile payment transactions in the US will rise by 55% in 2017 to $120.38 billion. Growth will remain in the double digits through 2021, when total US P2P mobile payment transaction value will reach $244.03 billion.
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