As the world of banking evolves, newer methods of banking continue to outshine their predecessors. Mobile banking is a prime example of this, with an increasing number of individuals turning to mobile payments as a way to pay, send and receive money.
Data revealed by MoneyTransfers.com has uncovered that in fact 25.7% of people worldwide use mobile payments, with this number expected to reach a share of 33.4% by 2024. In 2021, the global mobile payment market was worth $1.97 trillion and is set to grow at an annual rate of 29.1%, amassing a value of $11.3 trillion by 2028.
The market is showing no signs of slowing
The growth of mobile payments arises from the declining use of cash, which will fall to just 12.7% of payments by 2024. The demise of cash payments became apparent during the pandemic period as a result of individuals' desire to avoid physical contact as much as possible. The pandemic period thus saw an increase in mobile payments of 64.4%. However, it’s interesting to see just how significantly mobile payments increased in comparison to credit and debit cards. The share of payments via mobiles was twice that via credit cards and triple that of debit card transactions. Continuous growth is anticipated for the mobile payments market, with users in the US expected to spend on average $4,064.3 per year by 2025.
Whilst clear monopolies exist, companies should not be discouraged from entering the market
The mobile payments market already has clear monopolies with Alipay and WeChat Pay holding the largest mobile payment market share, with 650 and 550 million users, respectively. The remainder of the top 5 companies in this sector are American made apps - Apple Pay (507 million users), Google Pay (421 million), and PayPal (377 million). However, Apple Pay held the number one spot in both the UK and US. In the UK, 63% of mobile payment users cite using Apple Pay within the last year to complete transactions. In the US 43.9 million Americans use Apple Pay and this number is only expected to rise by an additional 14.4 million by 2025. However, not all key players within the mobile payments market are traditionally in the finance industry, Starbucks is exemplary of this, with the company boasting 31.2 million users of its mobile payment app - making it the second most popular in the US following Apple Pay. This demonstrates that companies should not be dubious about entering the market based on the current competition as the market allows for companies to cater the service to their own brand rather than vis versa.
The southeast and the younger generations are enjoying mobile payments the most
China has so far led the way in mobile payment adoption, with 87.3% of smartphone users in China using their mobile wallets for contactless payments. This figure is drastically ahead of other nations, with the second highest adoption rate in South Korea at 45.6% of smartphone users. America came in close second with 43.2%, however many nations are lagging behind. In particular Mexican and German natives are adopting at a much lower rate with just 14.2% and 19% of smartphone users, respectively, turning to mobile payments.
The demographic breakdown of mobile payments uncovers an obvious trend that the digital payment method is favoured by the younger generations. It was revealed that a staggering 84.6% of Gen-Zers and 81.3% of millennials in the US had used a mobile wallet for payments at least once in the previous year. This was quite the contrast from Gen-Xers and baby boomers of which just 65.4% and 33.3%, respectively, cited the same.
Barriers to users adoption can be overcome
Whilst existing users are enjoying the multitude of benefits that mobile payments offer, there are many individuals struggling with the change. In fact, 70% of Americans that do not use the service, abstain in fear of identity theft. This is, however, a valid cause for concern with illicit activities conducted using the service on the rise. For example, in 2021, 39% of all fraudulent transactions in the US were conducted through the use of mobile payments - an 8% increase from the previous year. However, there are certain precautions that can be taken to avoid being a victim of fraud. It was uncovered that smartphones made before 2016 had three times as many fraud attempts against them, suggesting that if possible, it is safer to own a newer model of smartphone when using it for mobile payments.
With revelations such as the above, users are able to learn how to protect themselves and safely use mobile payments to their advantage. In addition, much like other payment methods, it is important that governing bodies keep an eye on illicit activities to ensure that the safest possible service is provided to users.