Mobile payments. Image: Alohaflaminggo/Shutterstock
Worldwide, mobile payments are soaring. However, as with anything, certain areas are experiencing larger growth than others.
According to a recent study, mobile payments made by Chinese consumers last year reached $5.5trn, more than half of the nation’s GDP.
Despite being a country of immense numbers and eye-catching stats, this figure is stunning.
Rising tide
Dominated by WeChat and Alipay, the market is far more advanced than other rivals, such as the US, where Apple, Google, Samsung and Paypal helped to build a 2016 market worth $112bn. Even this relatively small sum was a rise of almost 40pc on 2015.
But what is helping China to stay ahead in this race? Clever deals.
For example, by the end of June, all 5,000 buses in downtown Hangzhou will require mobile payments, with the remaining 3,000 buses serving outlying areas following suit soon after.
And it’s not just with a domestic eye that Chinese companies are viewing the emerging payments market. This month, Alipay reached a deal to allow its users to make purchases at 4m US merchants served by payments processor First Data Corporation.
This means that the 5m Chinese tourists expected to travel to the US will get to buy the way they’re now used to. This, in turn, could kick-start a similar splurge in the US.
No surprises
None of this is news to analysts, who have been predicting this surge in mobile payments for a while now.
Not every country is experiencing growth, though. In Iran, for example, April 2017 saw an 8pc drop in mobile payments on last year; however, this appears to be a rarity.
At the end of last year, an IDC study indicated a rise of 35pc for payments made through NFC – using your mobile as a bank card, or cash.
A recent survey from Bank of America showed that 36pc of US adults currently use person-to-person (P2P) payments services or apps, with millennials leading the charge at nearly double that rate (62pc).
One of the more interesting aspects of this is the variety, as sums of money ranging from little to plenty are embraced.
For example, 51pc of people in the report consider it OK to request a friend to pay them back less than $5, with more than one-third claiming “no amount is too low”.
Europe, driven by EU policy changes, is heading that way, too.
Proxy for bank
In January, the European Central Bank announced that citizens of the EU will be able to make P2P mobile payments across Europe using only the payee’s mobile phone number – which will act as a proxy for their international bank account number – by the end of 2017.
Payments can be made, to stores or friends, all over mobile.
And Europe could well see the fastest growth. A recent Forrester report suggests that the market will triple in the years between 2015 and 2021, reaching $165bn.
Added to a growing US market and, despite operating in the shade of China, it would be a dramatic change to how we buy and sell things.
Throw in the race for blockchain technology and it’s fair to assume that the next decade will be a grand departure from the payments of yesterday.
