There are mobile payments and then there are mobile payments.
While various mobile payment providers have been trying to entice consumers for years to use their phones to pay, it just hasn’t been readily adopted by shoppers who can just as easily use cash or credit cards.
Of course, many mobile payment options require that merchants update their point-of-sale equipment to be able to handle mobile, which has been gradually happening around the globe, though a slow, tedious and expensive process.
And then, following other countries, along came credit cards with chips in the U.S., so merchants had to get that up and running with all the associated cashier and customer training.
And now another major study is out projecting strong growth for mobile payments for online goods and services over the next five years and beyond.
One of the core drives of this is the sheer volume of smartphones that will be in use, according to the study conducted by Ovum for Criteo.
Smartphones will grow from 453 million global users in 2014 to a staggering 2 billion by 2019.
And here’s where mobile payments hit the fork in the road.
One version of mobile payments is in the category of mobile commerce, which Ovum defines as remote, consumer to business mobile payments.
The other version of mobile payments involves proximity payments, as in paying in a store with a phone.
The lead today and into the foreseeable future is in mobile commerce. That segment is expected to grow from $51 billion in 2014 to a whopping $693 billion by 2019.
Mobile payments in stores are on a slower trajectory, with a mere 4 million people globally active in payments there.
This is partly due to the lack of NFC (near field communications) capabilities at stores. So even if a consumer has a smartphone with NFC, it doesn’t mean they can use it to pay in most places.
The good news for in-store mobile payments is that by 2019 it will grow to 1 billion users, according to Ovum. By then, NFC technology will be more widely deployed and become the dominant enabling technology for mobile proximity payments.
This is yet another indicator of just how long it takes to get some new technologies deployed at scale.
Interestingly, non-NFC mobile payments, like by using QR codes on phone screens, will lag behind, which is not the situation today.
The user base of those types of payments has been higher than NFC, with 40 million people using them in 2014. However, that will grow to only 152 million users globally by 2019, substantially behind NFC payments.
But even by 2026, credit cards will still be around, although the use of cash will be radically diminished, according to the study.
Another prediction is that mobile will finally become the dominant channel for loyalty programs and rewards, which makes total sense. This means that by 2026, traditional plastic loyalty cards and even smartcards will have been absorbed into mobile wallets. That’s also quite a while to get rid of those plastic cards.
Thanks to mobile commerce, digital payments are on a significant trajectory. Now if there would only be some driving reason for consumers to use their phones to pay in stores.