Commentary

Digital Payments & the Move to the Trillions

The migration of money to the digital world continues unabated.

The total value of digital payments this year is expected to increase from $2.5 trillion to more than $4.7 trillion by 2019, representing an average annual increase of 14%, based on new research.

This helps explain the move to mobile payments, since more consumers around the world are moving their money online rather than physically and more of them have smartphones.

Contactless payments have emerged as a means for both retailers and transport operators to see tangible benefits, based on the study Digital Payments Strategies: Online, Mobile and Contactless 2014-2019 by Juniper Research.

The report notes that this reduces operating costs and can increase sales, due to greater consumer throughput at the POS (Point of Sale) terminal.

From a mobile payments standpoint, the handset is essentially becoming a remote payment mechanism, allowing payments based on location. This also has the potential to increase in-store engagements, as marketers more fully interact with mobile shoppers.

However, there is higher activity with contactless cards, with Visa’s payWave and MasterCard’s PayPass leading the way, especially in Europe and Asia, according to the study.

Some markets also are seeing a significant proportion of online purchases coming from tablets, at least for physical goods, as couch commerce replaces desktop purchasing.

Showrooming adds to this dynamic, as smartphone shoppers research in stores and then return home to make a purchase later on their tablets, according to the study.

Tablets already account for 25% of all physical good transactions and will rise to 63% by 2019, according to Juniper, which sees tablets accounting for 22% of all online physical goods purchased by that time.

For context, Far East and Chin account for the largest share of transaction volumes, the largest values are from North America and Western Europe.

No matter how you slice it, more money is moving though mobile.

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