Mobile wallets were once a niche service for tech-savvy customers, but not anymore: digital wallets are the future of payments.
Over the last five years, mobile payments have grown, and grown, and grown. According to a report, global mobile wallet spending increased by more than 30 percent in 2017 to $1.35 trillion. In 2018, the value of mobile wallet transactions was $4.3 trillion.
By 2022, this number is expected to balloon to nearly $14 trillion USD. It’s estimated that by 2020 almost 1 in every 2 dollars spent online will come from purchases made using mobile devices.
However, despite the explosion of support for mobile payments, there is still lots of room for innovation and improvement, especially as more advanced mobile wallet technologies emerge. So what mobile wallet trends can we look forward to in the future? See
below for five different mobile wallet trends:
1. NEAR-FIELD COMMUNICATION (NFC) PAYMENTS
Perhaps the single biggest reason for the adoption and rise of mobile wallets is Near Field Communication (NFC). Offering security and simplicity, NFC payments allow for two electronic devices, such as a smartphone and a Point of Sale (POS) terminal, to
exchange small amounts of encrypted data. NFCs instantaneously transfer funds and confirm transactions, so customers no longer need to reveal their card information online or give their physical cards to cashiers.
In the US, NFC payments only counted for $75 billion of transactions in 2016. By 2020, this number is forecasted to jump to $500 billion, an 80% increase. According to reports by a major credit card company, “29% of Americans now make zero weekly purchases
with cash, with the percentage of people who use cash for everything dropping from 24 to 18% since 2015.” In the UK, the number of contactless card transactions per month was 14 million in 2014. In 2019, the amount of NFC transactions per month has risen to
644 million. According to UK Finance, 36% of all payments will be made via NFC enabled contactless cards by 2027.
Research also shows that the number of merchants accepting contactless payment methods could increase 74% over the next few years, with over 60% of merchants embracing contactless payments by the early 2020s.
While biometric technology may have been around for a decade, it has only recently become commonplace in consumer products. Biometric technology such as fingerprint, face, or iris scans make mobile payments faster, more convenient, and add an additional
layer of security, while also eliminating the need to remember passwords. According to industry data, by 2021 there will be over 18 billion biometric transactions happening every year. According to Visa Chief Risk Officer Ellen Richey, the growing use of biometrics
could make the password redundant by 2024.
What Are Consumers Looking For With Digital Wallets?
3. LOYALTY PROGRAMS
Customer retention and loyalty strategies are an integral part of a business’s success plan. A digital, mobile-driven loyalty program offers customers the ability to receive special offers, rewards, and discounts through their mobile wallets every time they
make a purchase. The majority of consumers want to be able to use reward points at checkout, and many consumers are in favour of a digital wallet that integrates loyalty programs that can be used at multiple merchants. Businesses can share news, promotions,
announcements, product details, and other valuable content and information through the app, and data collected from consumers allows businesses to deliver targeted promotions that consumers actually want, as well as suggest easy-to-use, value-added actions.
4. IMPROVED ARTIFICIAL INTELLIGENCE
Once reserved for TV shows and science fiction novels, in the last five years Artificial Intelligence (AI) has rapidly improved to the point that AI can now easily handle routine, everyday customer interactions. AI-based chatbots are able to handle customer
problems during e-commerce shopping and have streamlined the mobile payments experience by automatically preparing and executing basic transactions (with customer approval). AI will be essential in creating advanced fraud detection strategies and defending
against cyber attacks. AI is also able to handle voice instructions, which leads up to our next point…
5. SMART SPEAKER PAYMENTS
Home assistants, also known as smart speakers, have exploded in popularity in recent years. Driven by tech heavyweights such as Amazon, Google, and Apple, smart speakers allow customers to speak with them, give commands, and receive voice responses. Customers
can do everything from getting news on the weather, booking a table at a restaurant, or shopping online. Routine tasks such as ACH payment processing or number verification can be executed automatically without ever having to speak with a human support agent.
According to Business Insider, the usage of smart speakers for payment in the US will increase from 18.4 million users in 2017 to 77.9 million users by 2022, which is equal to 30% of the US population. Juniper predicts that the Internet of Things payments,
which includes voice payments, will see explosive growth from $24.5 billion in 2018 to $410 billion in 2023.