In the UK, many people are not carrying cash anymore because they are realizing the security and convenience of mobile payments. According to Deloitte’s 2015 Payments study, the use of cash is declining while other forms of payment are gaining popularity. There has been an increase in adoption of mobile payment technologies over the past few years. This is evidenced in the fact that Pingit, Barclays’ mobile payments app, hit its millionth business transaction early this year, up from 100,000 a year ago.
According to Adyan, a payments technology company, in Q3 2015, 47% of UK online transactions were made via mobile devices. Just a few weeks after launching of Android Pay in the UK, over 460,000 payments had been accepted. As UK continues to embrace mobile payments, let us look at the future of the UK mobile payments market.
Mobile payments market include mobile wallet point-of-sale payments processed on personal smart devices, app-based transactions with an appropriate payment terminal that belongs to the merchant and QR-Code, NFC or Bluetooth-based payment transactions.
According to Statista, transactions value of the mobile payment amounts to US$6,837m this year and is predicted to show an annual growth rate (2016-2017) of 70.2 percent resulting in the total amount of US$57,361m in 2020. In addition, the average transaction value per consumer in the mobile payments amounts to US$782.47 this year.
One in four UK consumers intends to use a mobile phone to make NFC-based in 2017, according to a study by MasterCard. Currently, only one in 20 is making NFC-based mobile payment once a week. The study reveals that with numerous mobile handsets enabled for contactless payments, reservations are disappearing, and, in fact, about 13 percent of the UK consumers have no reservations at all.
According to VISA, the UK payment will see an increase in the weekly value spent via mobile devices, with the market growing to about £1.2 billion per week by 2020. By the same time, the average shopper is expected to spend about £27 on mobile each week. Although music and apps are still the items that are bought most using mobile devices currently, VISA observed that the number of consumers buying higher value items is increasing. Electronics and clothes are among the most purchased items.
UK retailer The Co-Op predicted early this year that 65 percent of all the transactions at its stores and supermarkets will be made using mobile phones in 2025. This forecast followed a study released by the company, showing that contactless use at its stores was increasing and that about 11m contactless transactions take place at its 2,800 locations every month. The study, based on the shopping behaviour of 2,000 customers, revealed that the average basket spend for contactless was £8.66 and the average spend by consumers buying fuel via mobile phone was £9.38.
The key growth drivers that accelerate the growth of the Mobile Payments industry include lower cost, high consumer reach, quick transactions, ease of payment and growing smartphone penetration levels. Smartphones are becoming the hub of UK daily lives and are now in the pockets of more than 66 percent of UK adults. In the next three years, 75% of the U.K population is expected to have a smartphone. This shows that UK mobile payment market is going to experience an exponential growth.