The State Of Mobile Payments In 2023

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Mobile payments' fascinating evolution continues. While the pandemic may have served as a catalyst for increased usage, consumer behavior indicates that the trend will continue.

Since they were first introduced to consumers, mobile payments and also online payment gateway has come a long way. The first iteration involved simply formatting a traditional web browser for a smaller screen — often poorly. Payment information was manually entered, just like when purchasing from a desktop computer. Dedicated mobile sites and even individual apps have since transformed the E-commerce experience.

Despite only being around for a few years, mobile payments are quickly taking over the commerce space. According to Statista, nearly half of consumers aged 18-54 use mobile wallets, with millennials (aged 24-39) being the most mobile-friendly group, with 46% penetration. According to Mordor Intelligence, the mobile payments market has a compound annual growth rate of 24.5% and is expected to reach $5.4 trillion by 2026.
Experts believe that with such explosive growth on a global scale, this upward trajectory will continue. ...
... The greater the adoption of the technology by consumers, the greater the incentive for businesses to incorporate mobile-payment support into their platforms. The increased accessibility of mobile payments will encourage even more consumers to participate. Because of the unparalleled convenience provided, this will help to create habitual use and encourage a mobile-first approach to payments over time.

Convenience is essential. Despite the fact that mobile payments proliferated during the pandemic due to hygiene and health concerns, many consumers are continuing to use them even as those concerns subside. With the recent introduction of mobile wallets and contactless payments, in-person payments have been digitized, promising increased opportunities for mobile payments.

The Mobile Wallet Craze
In the last 18 months, the use of mobile wallets has increased. Most smartphones support mobile wallets. One of the primary reasons for their growing popularity has been their availability on all types of smartphones — a key factor in their rising popularity. Apple Pay, Google Pay, and Samsung Pay applications make it possible for all consumers to get started with a mobile wallet, often by simply scanning their credit card with their phone camera. Every POS system that accepts mobile payments is compatible with all of these applications, eliminating the need for merchants to run separate systems for each brand of phone.

Because they are scanned using radio-frequency identification (RFID), such as near-field communication (NFC), which works over short distances, mobile wallets still require the user to be in physical proximity to the checkout. This means that mobile wallets are less commonly used for E-commerce, though saved card data in the wallet can be used for online checkout. Instead, mobile wallets are increasingly replacing in-store cash and credit card payments.

This is not how many people envision mobile purchasing; the assumption is that mobile is only useful when purchasing remotely. In fact, the use of mobile devices in-store is becoming increasingly popular among both consumers and businesses. According to EMarketer, in-store mobile payments increased by 29% year over year, with more than half of smartphone users expected to use this method by 2025.

The obvious appeal of mobile wallets is their versatility: not only can consumers access the saved data for any mobile purchase, but they can also activate the mobile wallet for in-person payments through the best online payment gateway without having to pull out a physical card. This is useful for both security and convenience — if a customer forgets her wallet, she can still make payments without issue. Furthermore, all mobile wallet apps are free and easy to install on any smartphone.

The Shift to Contactless
Contactless technology has made it possible for credit cards to pay in person but from a distance, just as mobile wallets have. Credit cards that have been upgraded with contactless technology, which are designed to be used by physically sliding through or inserting into a terminal, open up a whole new use case. In light of pandemic-related hygiene concerns, this has been a game changer.

Contactless cards have an advantage over mobile wallets because they are a familiar payment method for the majority of people. They don't necessitate a change in behavior or a specific download; many banks have reissued all of their cards with contactless technology, while others are happy to reissue for free to anyone who requests it. This means that contactless payments are available to people of all ages and demographics, and are even simple for any credit card user to use.

The ability to make payments quickly and securely from a distance is what the two technologies have in common. A contactless card makes use of NFC technology to allow the terminal to scan its information with a simple tap or wave. By eliminating the need to enter a PIN, time is saved while security is maintained throughout the transaction. This also means that drive-through or curbside pickups, both of which have grown in popularity since the pandemic, can be streamlined.

Looking Ahead
Smartphones have been widely adopted by consumers, and their use for mobile payments is no exception. Mobile payments, which combine convenience and security, provide an upgrade to traditional systems with few or no drawbacks. Both consumers and businesses have recognized that purchasing in a contactless environment can only improve the customer journey and make it more enjoyable. While the future is unknown, we can be certain that it will involve mobile payments in a variety of formats.