Punch line: Not many consumers are currently using mobile phones to make purchases, but that’s about to change.
As more companies start to offer and advertise mobile payment options, consumers will start to spend more using their mobile phones.
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Excerpted from Adage’s, “Mobile Payments Still Tiny, Set to Explode in Next Four Years”
A few people have traded in their wallets for their phones to make small purchases like coffee and movie tickets, but we’re about to see explosive growth in the market as more consumers use smartphones to pay for things like groceries and gas.
Research firms estimate that the total transaction value for mobile payments in the U.S. will be $640 million this year, but that will grow to more than $62 billion in 2016 as a bigger segment of the population uses their phones to buy medium-ticket items, including fast-food restaurants.
The average user of mobile payments will spend $62 a year with their phones in 2012, but that grows to $1,294 in 2016.
The steep growth curve assumes merchants continue to adopt mobile payments and that using phones for purchases demonstrates enough value to consumers to replace credit cards and cash.
The mobile payments market today includes startups like Square, LevelUp and The Protean Echo; services backed by credit card companies like Visa and American Express ; a consortium of big merchants like Target and 7-11 and CVS; tech companies like PayPal, Google Wallet and Apple’s Passbook; not to mention Verizon, AT&T and T-Mobile which have their own consortium, ISIS.
While the array of platforms and technologies creates confusion for consumers, it will also raise awareness broadly, as payment options become more ubiquitous and various players spend on marketing to gain users.
Edit by BJP