Last week we covered the news that contactless spending is rocketing in the UK, fueled in part by mobile payments. Guess what? More promising statistics have emerged which reveal 2015 was a year of huge expansion for mobile payments in the US.
An in-depth report from 451 Research on mobile payments in 2015 found NFC-based payments rocketed from $1.4 billion in 2014 to $5.2 billion in 2015, while mobile P2P payments accounted for over $11 billion.
Remarkably, they’re estimating that by the end of 2016, contactless transactions will more than double, beyond $12 billion. Additionally, there were a greater number of survey respondents who claimed they’d be ‘very likely’ to use mobile payment apps – an increase of three percent. Consumers are taking advantage of seamless transactions and the greater flexibility in their shopping patterns.
The news caps off a transformational year in the US for NFC, with the report rightly labelling 2015 as a ‘turning point for the technology and mobile wallet ecosystem’. Indeed, there were a number of key developments, such as the launch of Apple Pay and Android Pay, as well as the EMV liability shift, which has put pressure on merchants to provide chip-enabled card readers, making them accountable for fraud as opposed to the card issuers. So, essentially, there’ll be trouble if they’re not using more secure payment terminals!
The report also provided some interesting insights into just why US consumers are opting for mobile payments. Unsurprisingly, ‘ease of use’ scored highly, with 35% suggesting this was a factor in using mobile payment technology. Furthermore, promisingly, 24% felt mobile transactions were more secure.
So, all in all, things are looking very good indeed for 2016 from a NFC and mobile perspective. However, that doesn’t mean there isn’t work to be done. The report highlighted a number of challenges for the year ahead – and unsurprisingly, authentication and identity cropped up, along with factors like loyalty and reward integration.
Notably, the report highlighted tokenization’s role in making mobile payments more secure, predicting that ‘tokenization’s influence and role will grow further’. It’s an outlook we share. Tokenization is so effective because it involves the replacement of high-value security credentials with tokens, which are only worth anything in a particular scenario. Gemalto’s Trusted Service Hub, for instance, protects payment credentials by using substitutes, which are provided to the cardholder’s mobile when they’re making a payment.
There will be obstacles to overcome, of course, but the future looks promising for mobile payments in the US – providing secure solutions like TSH continue to be deployed. What do you think of the report’s findings? Let us know your 2016 mobile payment predictions by tweeting us at @Gemalto, or by posting a comment below.