Contactless payments are picking up the pace, and while still dominated by contactless cards, mobile wallet adoption is estimated to reach 450 million users by 2020, with Apple Pay accounting for 1 in 2 mobile wallets.
New data from leading fintech analysts, Juniper Research, estimates that driven by payment cards and mobile wallets, in-store contactless payments will reach $2 trillion by 2020, representing 15% of the total point of sale transactions. Contactless payments will exceed the $1 trillion mark for the first time in 2018, a year earlier than previously anticipated by Juniper.
According to the new research, Contactless Payments: Payment Cards, OEM Pay & Mobile Wallets 2018-2023, the mobile contactless payments market will be driven by Apple Pay, Samsung Pay, Google Pay, and other OEM Pay wallets. Combined, these OEM Pay wallets users will reach 450 million by 2020, with Apple accounting for 1 in 2 OEM Pay users globally.
For reference, 90 percent of all mobile in-store payments in the US are conducted through Apple Pay. Further findings from the US markets shows that 27 percent of the addressable market has registered and tested Apple Pay, indication a low to moderate adoption rate, but only 8 percent of iPhone owners are frequent users of Apple Pay. Even with relatively low adoption rates so far, Worldpay reports a 328 percent year-on-year growth in contactless mobile payments the in UK.
An interesting footnote on that estimate is that Android today accounts for around 85-86 percent of the global smartphone market, compared with Apple’s iOS’s 14-15 percent. While frustrating for those who are not Apple, this shows how Apple benefits from keeping access to NFC proprietary while OEMs like Samsung competes with services like Google Pay and HCE-based wallets issued by financial institutions among others.
HCE-based wallets have also increased in popularity, with a plethora of banks launching their own wallets, while PayPal and Google have also introduced similar offerings. However, despite a growing number of bank wallets, adoption of these services has been relatively modest with reported user numbers rarely beyond tens of thousands.
Besides contactless payments, eMarketer predicts that in 2018 more than one-third of smart phone users ar will use a mobile phone to pay for a purchase at a physical point of sale at least once every six months. This will be mainly driven by the Asia-Pacific region, more specific to China where Alipay and Wechat pay are dominating the payment field. where other methods of payments like QR-codes are also deployed through payment services like AliPay to encourage merchant adoption without upgrading existing payment infrastructure.
Beyond in-store payments, the research forecasts rapid growth in contactless ticketing, especially in the European and North American markets where mobile wallets have been deployed. Juniper forecasts nearly 10 billion mobile contactless ticketing transactions, ie tickets purchased or validated, by 2022, with North America dominating the sector, followed by the Far East & China.
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