US proximity payments will rise, but slowly says Aite

US proximity payments will rise, but slowly says Aite

The US retail m-commerce sector will be worth $536.5bn by 2020, from a base of $112.5bn in 2015, Aite Group is predicting in its new report entitled 'Mobile Proximity Payments: A Disruption in the Force'. It is predicting the specific mobile proximity segment will lag behind, however, reaching $487bn by 2020 from just $7.5bn now.

The delay in proximity payment transaction volumes overtaking wider m-commerce volumes is due to the relatively slow rollout of near field communication (NFC) terminals in the US, which is only now introducing EMV and updating its infrastructure.

 Aite Group’s report details how the belated installation of NFC-capable payment terminals in the US; growing prevalence of NFC-capable smartphones; and the emergence of tokenization and biometrics - in devices such as Apple’s iPhone 6 and the related Apple Pay - have all combined to create a great deal of consumer and merchant interest in mobile proximity payments. Uptake will follow and ultimately the sector has a bright future.

Samsung Pay, among many other initiatives such as CurrentC from the Merchant Customer Exchange (MCX), will drive interest in mobile payments and commerce. The relaunched Google Wallet/Android Pay is also a major player, particularly since it purchased the Softcard (formerly ISIS) NFC payment estate previously developed by AT&T, Verizon Wireless and T-Mobile. As part of the sale all three carriers agreed to load Google Wallet into all the Android devices they sell.

The Aite Group report is based on interviews with over 50 US CEOs, opinion leaders and business managers in the mobile payments and commerce arena. It covers the major players, technologies and issues impacting the sector such as how to drive consumer adoption.

The US arena is seeing a breathtaking array of proximity payment offerings and is rife with competitive initiatives and disruptive market entrants, but Aite Group questions if the payment enablers can overcome the inhibitors and create new payments empires? Time will tell.

“Customer adoption of mobile proximity will depend upon the quality of the user experience, which needs to be as good as or better than the card payment experience,” says the author of the report, Thad Peterson, Aite Group’s senior analyst for the retail banking and payments sector. “While mobile proximity payments will grow quickly as NFC distribution becomes universal and customers begin to use the platforms, mobile commerce will still drive more transaction volume in the next five years.” 

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