2017 looks set to be the year of the digital wallet with Juniper Research predicting collectively Apple, Samsung and Android Pay will be adopted by an extra 50 million users globally this year to reach over 150 million people worldwide.
But that's just a drop in the m-commerce ocean according to their further prediction over 500 million users will be utilising one of these three payment methods by 2021, equating to 56 percent of the market share.
This handset enabled version of the digital wallet will also be complemented by Host Card Emulation (HCE), with 194 banks rolling out similar services in 2016, and PayPal set to limber up with "a portfolio of contactless payment and loyalty solutions that will allow it to compete effectively for market share".
Some big figures
In their recent report Contactless Payments: NFC Handsets, Wearables & Payment Cards 2017-2021, Juniper found:
- The combined market share of Apple, Samsung, and Google (via Android Pay), increased from 20% in 2015 to 41% in 2016, as a proportion of total mobile contactless payment users.
- Apple led the charge, with 15 million users in 2015, 45 million users in 2016 and an estimated 86 million users by the end of 2017.
- Samsung was next in line, with 3 million in 2015, 18 million in 2016 and an estimated 34 million in 2017.
- Following closely behind was Google's Android Pay, with 2 million in 2015, 4 million in 2016, doubling to 24 million in 2017.
“The research found that Apple Pay, and the alternative wallets that have followed in its wake, are set to establish themselves as the primary contactless mechanisms of choice in the US,” Juniper Research says.
“However, the challenge facing Apple and its rivals is to ensure that the infrastructure is in place for consumers to make in-store payments.”
They further note: “2015/16 were watershed years for HCE in terms of commercial services rollouts. Juniper estimates that at least 194 banks had introduced such services by the end of 2016.”
The Australian landscape
Australia has traditionally been a ready adopter of contactless payments including Pay Wave and Tap ‘n’ Go enabled bank cards, but the handset enabled (OEM) digital wallet debate was tainted by a battle between Apple and the country's big banks.
In late March, however, the Australian Competition and Consumer Commission ruled the banks could not collectively bargain with Apple for rights to its NFC-enabled technology.
Or as the ABC explains: “Commonwealth Bank, Westpac, NAB and Bendigo Bank sought to bargain with Apple for access to its Near-Field Communication (NFC) technology in iPhones and "reasonable access terms" to the iTunes App Store”.
This would have allowed the banks to offer their own digital wallets to iPhone users in competition with Apple Pay. But the ACCC brought down a decision that this was not to be.
Despite the battle, in February this year news.com.au noted: "Data from Apple reveals that Australians make more Apple Pay transactions a month than any other customers around the world, with Australia’s love affair with contactless payment systems helping drive the growth".
Meanwhile Samsung Pay only launched in Australia in June last year, and Android Pay kicked off here in July.
What retailers need to know
In an age where the consumer expects increased checkout speed, better customer experience and has greater access to smartphones, mobile commerce is a trend on the rapid rise.
And for retailers looking to embrace it, hopping aboard the m-commerce trend is a simple affair. Mobile Point of Sale apps like Paypal Here, and Square POS are among others readily offering simple POS apps with affordable card readers capable of taking near field communication (NFC)/ contactless payments.
In effect it makes a cash register as simple as a tablet, an app, and a card reader attached to the headphone jack.
The benefits for a relatively small investment will be very real. The consumer of tomorrow and even today expects to pay when they want, swiftly, in the manner of their choosing.
Or as noted by Jupiter: "We believe that, as contactless usage gains traction and consumers/merchants recognise the speed and convenience it offers, then, as in European markets, there will be a further and significant increase in availability at the point of sale.”