It's no secret that mobile payments are growing by leaps and bounds. It's not hyperbole to say that mobile payments are the future of financial transactions, especially in the consumer-to-business marketplace. Is that future happening sooner than you might think? It looks that way - if a new report from Forrester Research and PayPal has it nailed. (For related reading, see Mobile Money: Using Your Cell Phone To Transfer Funds.)
TUTORIAL: Credit Cards
Change is Coming Sooner Than You Think
First, know that mobile payments are already widely viewed as being "mainstream." A July 2011 study from KPMG notes that 72% of business executives say that such payments, on a large scale, are inevitable. Another 58% say that their companies already have a mobile payment system in place.
"We believe that exploding smartphone growth and a myriad of opportunities will grow mobile payments at a much faster rate than our respondents anticipate," said Gary Matuszak, KPMG global chair of the Technology, Communication and Entertainment practice, in a statement. "A wide variety of payments is ready for adoption, as several key players already provide or are rolling out mobile payments, and interest among consumers in utilizing mobile payments is growing, in line with the industry's readiness to deploy them."
That could be happening faster than even the most optimistic mobile payment advocate could have hoped. Recent data from the U.K. arm of Forrester Research, in partnership with PayPal, estimates that mobile payments will replace other forms of payment by 2016.
No Wallet? Use Your Smartphone Instead!
A PayPal article, entitled No Wallet Required, examined the British mobile payment marketplace and concluded that "digital money" will become the go-to payment method within the next four years.
"We'll see a huge change over the next few years in the way we shop and pay for things," says Carl Scheible, Managing Director of PayPal U.K. "By 2016, you'll be able to leave your wallet at home and use your mobile as the 21st century digital wallet. Our vision of money is to enable you to pay for something from wherever you are, whatever device you're on – a PC, mobile phone, tablet, games console [sic] and a whole lot more." (For more, check out 8 Low-Cost Ways To Transfer Money.)
Scheible adds that paper currency won't go away entirely, but will face a diminishing demand. "The lines between the online world and high street will soon disappear altogether," he says. "Children born today will become the U.K.'s first 'cashless generation.' It will be completely natural for them to pay by mobile."
PayPal should know. It already processed about $3.5 billion in mobile payments in the U.K. in 2011 alone – that's five times the amount that the online payment giant saw in 2010.
The Bottom Line
The report says that the trend is only growing stronger with each passing year. About 50% of all mobile or smartphone device users bought something via mobile payments in the three months leading up to the publishing date of the study.
That number will grow, the data shows, and will cement mobile payments as the payment of record for consumers not just in the U.K. but also in the U.S.(To learn more about this technology, see New Technology: Pay Without Your Wallet.)
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