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The global mobile payment market size was USD 925.69 billion in 2018 and is projected to reach USD 6,884.24 billion by 2026 in terms of transaction value, exhibiting a CAGR of 28.7% during the forecast period.
Mobile payment is a service that offers money transactions using mobile devices. Mobile payment enables to undertake remote transactions which are the substitute for cash-based transactions. The increasing adoption of smartphones and high-speed mobile data network is further boosting the adoption of mobile payment. The digitalization of payment services and growing e-commerce business are also creating demand for the mobile payment market trends. The digital generation i.e. generation Z is the future customer base for the mobile payment industry. Mobile payment has a significant impact on industries such as BFSI, retail, medical and healthcare, automotive, and transportation.
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The mobile payment offers two types of services, namely, remote payment and proximity payment. Remote payment does not require location presence; the user can send money through mobile by linking their credit or debit card details with apps, SMS, direct carrier billing, mobile wallets, and others. The mobile wallets allow contactless payment options through card terminals, internet transactions, or through in-app purchases. In the direct carrier billing, mobile network operators add the amount in the phone bills. Whereas, in mobile banking, users can get access to the apps provided by the banks for direct transactions through their bank accounts. Proximity payment is the transaction of money at the physical point-of-sale. It is also called near field communication (NFC) payment. The near field communication payment method is used in the card machines for identifying proximity radiofrequency. Unlike PIN or chip technology, the NFC offers instant transfer of data. For instance, in some countries such as London, China, or Japan, local transports, namely, buses and tube stations accept mobile payments through NFC with tap card facilities. The other type of proximity payment is quick response (QR) code, which offers in-store payment via scanning the unique QR code.
Mobile payment also offers safety and security during a financial transaction. To provide secured payment, mobile payment providers are offering fingerprint scanner, face or iris scans, biometric, or the unique PIN for identification and accessibility during the transactions. On an experimental base, MasterCard is planning to offer a selfie feature in their app for identification in order to initiate the payment. While paying through mobile devices, individual security codes are provided by mobile payment service providers.
Along with the rising competition in the market, it is essential to offer a better customer experience for increasing the customer base. For this, companies are launching value-added services or features such as reward cards which have resulted in increasing consumer spending through mobile payments. Moreover, through cashback and points, billions of customers are receiving various rewards. Several companies across the industries such as airlines, retailers, hotel chains, and the restaurants are extending integration with these payment apps and are offering direct rewards for paying through mobile apps. With this strategy, they are developing a strong relationship with their customers to enhance and sustain their loyal customer base.
For instance, Starbucks has initiated delivering rewards and loyalty points called ‘stars’ to those customers who are paying via mobile payment application. The company offers barista scan apps that generate the barcode, which the users can redeem while paying. This reward and payback strategy positively affected the company’s sales. Similarly, retailers are also offering different types of loyalty points. On achieving certain points, a user can redeem them against free or discounted food or drinks. On the Starbucks app, the user can track the loyalty stars and aim for the next level. Many such customer-oriented industries, such as travel and tourism, restaurants, and hospitality sectors have started adopting mobile payment apps. Furthermore, Hilton hotel chain started room booking and payments through their own app ‘Honors’ to enhance their customer engagement.
“Integration of Artificial Intelligence to Boost Market Growth”
The rising competition among the retailers in the market is creating the need to provide a better customer experience. The emergence of mobile payment is enabling the sellers in controlling the customer experience. Mobile payment is creating tremendous data sets with each transaction. The data consists of channels adopted by the user, their purchasing trends and buying behavior, rewards applied, and redeemed among others. In addition, artificial intelligence helps businesses to process the data and recognize the patterns. AI uses this data to identify the buying behavior of the consumers. It also helps to detect future trends, such as the purchasing preferences/patterns of the users. This enables businesses to plan future campaign strategies and business plans for gaining efficiency. Also, with AI, daily interaction can be achieved via chatbots, which prepare and execute the transaction process as requested by the user. AI can handle the automatic payment process and number verification without human interference. A large amount of data is being generated at the banks and merchant centers during the payments. Mobile payment requires continuous scanning to prevent fraud, and hence, the companies are adopting AI for scanning. As AI can detect patterns, it can be very useful in detecting the fraudulent activities in the mobile payments. With the use-cases and historical data pattern, AI can detect fraudulent activity in real-time. Rising integration and implementation of artificial intelligence in mobile payment for better customer experience and secured mobile transactions are increasing the mobile payment market revenue during the forecast period.
“Pay-backs and Reward Strategies to Boost the Adoption of Mobile Payment Technology”
The mobile payment is gaining traction with the increasing adoption of smartphones and an omnipresent internet facility. Many providers are at present, entering the mobile payment business, thereby creating a tough competition in the market. These players are offering new techniques to maintain a loyal customer base and to attract new customers. For instance, Google Pay offers scratch cards containing a certain amount that can be achieved over minimal transactions. Such initiatives are also important to maintain customer relationships. In addition, companies have started to offer rewards and cashback when the customer opts for mobile payment channels for transactions. With the implementation of such reward facilities, the customer tends to use mobile payment apps for every transaction. This will boost the adoption of mobile payment. Moreover, the players are providing an app to maintain a track of points of the users. For instance, Samsung Pay offers reward points to the Samsung smartphone users for every purchase they make. The Samsung reward points can be used to purchase Samsung products. Thus, through mobile payment app users can access, track, and redeem points, receive location-based offers, make mobile payments, and provide added convenience and utility.
“Proximity Payment Segment to Generate the Highest Revenue Owing to Hassle-free Usage”
As per payment type, the market is categorized into proximity payment and remote payment. The proximity payment segment is further sub-segmented into near field communication (NFC) and QR code payment. The remote payment, on the other hand, is further categorized into unstructured supplementary service data/ SIM application toolkit (USSD/STK), direct operator billing, digital wallet, and others.
In-store mobile payment is known as proximity payment. The contactless payment is exhibiting a high adoption in the payment market. Proximity payment is free from the card and cash transactions and can be achieved through swiping, tapping, waving, or through other similar contactless processes. In the proximity payment segment, near field communication (NFC) is the major contributor for the forecasted period. Many telecommunication companies such as AT&T, China Mobile, Bharti Airtel, Vodafone Group, and others are providing SIM-based NFC which can be instantly operated at the point of sale (POS). Also, peer-to-peer transactions have become instant and easier with the NFCs. Earlier, this process was time-consuming. But today, with NFC and QR code, transactions are done easily and quickly.
Moreover, the required standard devices for NFC are gaining traction and are widely implemented at POS. Presently, the mobile payment market share of NFC is expected to rise exponentially through the forecasted period. While the quick response (QR) code has gained instant popularity in the market with its launch due to the easiest way of mobile payment. The QR code is a unique barcode that can be scanned by the users to initiate the transaction. This process is widely used for peer-to-peer transactions and mostly used in the retail industry. The easy usage and availability of standard devices are boosting the proximity payment segment in the mobile payment market.
“BFSI, Retail, and Media and Entertainment Segments to Exhibit a Substantial CAGR during the Forecast Period.”
The industries covered in the mobile payment market are media & entertainment, retail, BFSI, automotive, medical & healthcare, transportation, consumer electronics, and others (education, IT & telecom, etc.).
The retail industry is getting highly impacted by the penetration of digitalization and technological innovation. The retail industry was the early adopter of mobile payment technology. Nowadays, consumers are constantly experimenting with new retail channels and payment solutions. With the development of mobile payment services, the retailer is constantly re-evaluating the payment solution. A better customer experience allows retailers to retain loyal customers and also to attract new customers. Retailers are keen on providing convenient payment options to customers. Also, the rising adoption of smartphones is boosting the adoption of mobile payment. Mobile payment offers a quicker and faster way of payment. The new technology integrates easily with the older version of devices present at the POS. Due to this, low investment and service costs are required in the mobile payment market.
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Apart from the retails industry, mobile payment technology is also providing prominent opportunities for the BFSI industry, as this platform enables instant transactions without following a long process. The mobile payment platform providers are partnering or collaborating with banks and other banking service providers to integrate this technology into their payment platform. This has led to the introduction of a mobile banking platform that allows users to do the transaction or payment for shopping, retail payments, electricity payments, and others. Furthermore, some of the payment platform providers in the market such as Google pay, Paytm, BHIM, and PayPal allow users to do the transaction without adding money into the wallet and transfer the amount directly from their bank account. This is anticipated to drive the adoption of mobile payment technology in the BFSI industry and supplement the growth of the market in the coming years.
For media and entertainment, the user is now trusting the mobile payment options for content. The video streaming industry is offering movies and original TV series on subscription. Users can purchase them directly through the available mobile payment apps by linking their bank accounts through these payment apps to manage future transactions. Similarly, the adoption of mobile gaming is increasing, along with the penetration of smartphones. Gamers can directly purchase the games using mobile payment.
Asia Pacific (APAC) contributes a major mobile payment market share. In this region, Japan is the leading country in adopting mobile payment followed by India and China as they possess the highest population. Therefore, the adoption of smartphones is extensively high in these countries. It is estimated that the millennial generation relies more on mobile than on internet surfing. India is expected to have a huge growth potential in the future. The adoption of mobile payments exponentially increased after demonetization in this country. Government initiatives such as digitalization are expected to boost the market further in China. Also, Alipay.com Co. Ltd. is a major player in the payment market of China. The emergence of new e-commerce channels, rising online shopping, and new mobile payment solutions are also expected to support the APAC mobile payment market growth in the forecasted period.
North America and Europe together are anticipated to account for the next highest market share. The U.S. has well-developed mobile payment methods. The country also offers the best financial system in the globe. However, it is still observed that people are hesitant to adopt transactions over mobile devices. The U.S. market is expected to majorly use cash or cards at the point of sale (POS). With strategies such as payback or reward systems, mobile payment providers are attracting consumers in the U.S. and Canada. Whereas, Europe is an established and emerging market with various mobile payment solutions, maximum people in this region own bank accounts and payment cards. It is likely that with the introduction to innovative mobile payment solutions, the market will adopt transactions via mobile devices for medium to long-term period. Germany is expected to acquire the maximum share with the presence of international mobile payment service providers. Companies such as Telefonica and Vodafone launched NFC payment for the German market.
Asia Pacific Mobile Payment Market Transaction Value Size, 2018 (USD Billion)
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The Middle East and Africa region is expected to grow considerably in the forecast period. The MEA market has less adoption of credit cards, which provides a huge scope of growth for the mobile payment market. Also, the region is exhibiting an increasing adoption of smartphones. In Africa, Bharti Airtel has collaborated with Standard Chartered Bank and MasterCard for providing mobile payment wallets. Latin America is an emerging market in the mobile payment marketplace. The existence of financial services along with the good penetration of mobile phones and the internet are the main driver of mobile payment market growth over the period in this region.
“Market Players are Emphasizing on Launching Their Own Mobile Payment Platforms”
Some of the key players in the mobile payment market, such as Mastercard, Visa, PayPal, Google, Amazon, Alipay, Obopay, and others have contributed majorly to the market. These companies are investing huge sums in the development of unique mobile payment solutions. Also, various network operators and mobile payment providers are collaborating to enter the market.
Various key players from industries are using mobile payment solutions to provide value-added services to enhance the customer experience. The industry is integrating payment options with its in-house apps for providing a convenient payment process. The innovations are also incorporated with payment technology. For instance, the fingerprint recognition system is incorporated by companies such as Apple Inc., Google Inc., and Samsung electronics. Qualcomm is providing ultrasound for scanning a fingerprint, along with detecting the blood flow.
The research report offers an in-depth analysis of the market. It further provides details on the adoption of mobile payment solutions across the regions. Information on trends, drivers, opportunities, threats, and restraints of the market can further help the stakeholders to gain valuable insights into the market. The report also offers a detailed competitive landscape by presenting information on key players, along with their strategies, in the market.
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Transaction Value (USD billion)
By Payment Type
July 2019: Visa announced the acquisition of a payment gateway company called Paywork, based in Germany. This acquisition would help the company to focus on the point of sale of in-store payment solutions. It will also offer a user payment management platform on all the channels.
March 2019: Alibaba Group Holding Limited partnered up with Ant Financials and launched international mobile payment solutions for tourists and business travelers. This will help in providing easy cashless transactions and reduce the inconvenience of currency conversion.
Fortune Business Insights says that the mobile payment market is projected to reach USD 6,884.24 billion by 2026 in terms of transaction value.
In 2018, the mobile payment market was valued at USD 925.69 billion in terms of transaction value.
The mobile payment market is projected to grow at a CAGR of 28.7% in the forecast period (2019-2026).
The proximity payment segment is expected to be the leading segment in the mobile payment market during the forecast period.
The integration of artificial intelligence for better customer experience and secured mobile transactions is the key factor driving the mobile payment market growth.
MasterCard, Visa Inc., Alipay.com Co. Ltd, Amazon Inc., PayPal Inc., and Google Inc. are the top players in the mobile payment market.
Asia Pacific region is expected to hold the highest mobile payment market share.
Industries such as retail, BFSI, and media & entertainment are expected to adopt mobile payment solutions.