According to analyst house Gartner, the value of worldwide mobile payments is set to soar 62% to $171.5 billion in 2012. Moreover, if the market continues to grow at this rapid rate, it should be worth a massive $617 billion by 2016. This would mean mobile
payments reaching 448 million users – a significant chunk of the world’s current population.
Just one year ago this possibility would have seemed a distant reality, but in recent months the mobile payments industry has progressed leaps and bounds in the UK. On top of the launch of a plethora of high street banking and retail payments apps, PayPal
has just announced deals with 230 Coast, Oasis, Warehouse, and Karen Millen stores to roll-out its InStore payments app.
This marks a major move away from the low-value mobile payments currently facilitated by coffee shops and fast food outlets like Starbucks, instead targeting Britain’s thriving high street fashion market with fast, barcode-based smartphone payments. The
value of the purchases processed will naturally rise as consumers move from simple coffee orders to buying the latest must-have bag or dresses worth several hundred pounds. This will undoubtedly increase consumer confidence in the usability and security of
mobile payments solutions.
PayPal’s step into women’s fashion highlights the possibilities that abound for mobile payments in the retail sector, using an innovative barcode and PIN security process to beat the complex ecosystem concerns sometimes associated with NFC. The ever present
need for a PayPal account could prove a stumbling block for the technology, as experience shows that consumers tend to drop out of the registration process if it proves too laborious. Barclays has certainly factored the need for ubiquity and accessibility
into its business model for Pingit, taking the decision to expand the usage of the payments solution to all banks just two months after launch.
Ultimately, PayPal’s deal is a strong example of the penetration of mobile payments into new areas of the UK’s retail sector, and a revolutionary approach to the payments process. However, while many of the services available continue to be closed to particular
stores and payments providers, customers will be looking for added extras to encourage them to invest the time to register for the payments. PayPal and others will need to give their customers major incentives, such as loyalty rewards and voucher codes, to
warrant a potentially lengthy sign-up process and succeed in the long-term.