Mobile payments are not new. However, they have not really taken off like expected yet either. Year after year we keep hoping that this will be the time when mobile pay finally breaks loose and explodes with growth. But year after year we are disappointed with only incremental growth. Could 2015 be the year that Mobile Pay really takes off?
Over the past decade I have been contacted several times by wireless carriers like AT&T Mobility (T) , Verizon Wireless (VZ) , Sprint (S) and T-Mobile (TMUS) promoting their mobile pay offerings. I have offered comment to the media as they write stories and have always been excited about this new form of mobile banking and mobile payment. I have even written about this topic in my columns from time to time.
However, over the years, every one of these steps turned out not to be growth waves, only ripples. So the question remains: when will mobile pay become real and go big time?
Though mobile pay still feels new to many consumers, online payments have been with us for many years now – think PayPal (EBAY) for example. Like ATM cards from a few decades ago, paying with a mobile device will take users time to get used to it and feel comfortable trusting it.
There are also conferences in this growing space like the Mobile Payment Leadership Summit, coming in January. They talk about seizing new market opportunities, overcoming consumer concerns and barriers and creating wider adoption. This is some of what the new segment is wrestling with today.
Could More Players in the Mobile Pay Space Mean this is the Right Time for Growth?
An apt comparison to the likely mobile pay boom coming soon is the smartphone explosion in 2007-2008. The smartphone revolution is only seven years old, but we had been using them for a decade before that.
Years ago, Blackberry (BBRY) was number one and there were quite a few others with smaller market share. The smartphone sector grew slowly to roughly 15% market share. There were only a few hundred apps. In fact, no one knew what an app was back in those days. It was not in our vocabulary.
Seeing lots of potential growth, carriers and handset makers had been trying to prime this pump for years, with very limited success. Everyone wanted it to become real because that meant growth for carriers and smartphone makers. Still, growth was very slow.
Everything changed around seven years ago when the first iPhone from Apple (AAPL) hit the marketplace. Then it was quickly followed by the Android from Google (GOOG) , and the race was on.
Suddenly there was excitement and buzz around this growing smartphone sector. Before this time, smartphones were only viewed as business devices. After entering the consumer marketplace, growth started to explode.
Today, smartphone market share has jumped from roughly 15% to more than 60%. Further still, the app market has jumped from a few hundred to more than one million, Everyone knows what an app is, and as apps mature, they become more useful to the user and to companies who want to interact with them. People use them for more than just accessing the web, but also for keeping track of expenses, staying in touch with their doctors reporting their diabetes numbers or weight. It only seems logical that smartphone users will be warming to making payments on their phones and tablets.
Signs of Mobile Payment Growth on the Horizon
Today I see mobile payments growing, but more slowly. Sort of like the smartphone growth before the first Apple iPhone or Google Android. PayPal has been around for more than a decade and has not been the catalyst for growth, but will benefit when things do start to grow. Google Wallet launched and has seen good, not great acceptance. That will also benefit once the marketplace starts to explode. Apple Pay is now out and is starting to be a catalyst for Mobile Pay. This is important, but not the only factor leading to an explosion in mobile pay. However, a quick look at Black Friday sales say that things may indeed be starting to change.
Early reports say that mobile shopping over smartphones and tablets is increasing. That’s the space where mobile pay can really grow once users sign up and start to use it. However, mobile pay is still a separate category within that space because users can just use their credit card to pay on their mobile device. They don’t need to use Apple Pay or competing technology.
Early reports also say Apple iPhone and iPad have roughly four times as many purchases as Google Android smartphones and tablets. This is very interesting. It suggests Apple customers are more likely to trust and use this new technology, to start anyway. So Apple Pay may be the technology that really starts to launch this entire sector. Add to this, another new competitor called CurrentC which should be rolled out in the next few months. The Merchant Customer Exchange will operate CurrentC. Members include roughly 50 chains so far, including Wal-Mart (WMT) and Best Buy (BBY) .
This holiday shopping season shows mobile pay is starting to make real progress as more users shop and buy using their smartphones and tablets. So it seems that 2015 may be the year when all this mobile payment promise will finally start to become real, and hopefully grow rapidly.However, we’ll have to keep our eyes on this space to be sure, because the promise has been there for years.
Stay tuned. 2015 could be a very fast growing year in the mobile pay space.
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