With the mass adoption of smartphones and tablets, the world is slowly coming to a new stage, for a new move. World is going away from fixed-point, card-based transactions and going toward those completed on mobile. The old dream of the "digital wallet" is coming true.
In a recent report from BI Intelligence, BusinessInsider.com explains the main types of mobile payments, analyze the state of the mobile payments race and examines the match up between card readers and near-field communications. Also, it's interesting to see how traditional banks, credit card companies, and card processors are responding to the mobile payments threat.
We provide you an overview of the current state of the mobile payments race.
In general, we're still in the early stages of mobile payments adoption, and that's a fact.
As of year-end 2012, only 7.9 million U.S. consumers (less than 90 percent of the total) had adopted a consumer-facing NFC-compatible system like "Google Wallet," or apps that use QR codes or other methods to generate a payment.
But, something else is really interesting. In-store mobile payments nearly quadrupled last year! eMarketer has estimated in-store mobile payments as adding up to $640 million in transaction volume in the U.S., up from $170 million in 2011. However, this figure does not include swipes on mobile credit card readers like Square and PayPal Here, only consumer-side mobile payments. Anyway, this is an important thing to know.
On the other side, card readers are building up real scale - Square's mobile payments volume rose to $10 billion in 2012, up from $2 billion in 2011.
Starbucks is switching its credit and debit card processing to Square.
From January 2013, Starbucks accepts the "Square Wallet" app at 7,000 locations. That's huge! The Starbucks alliance with Square is evidence of how the card reader-based approach has already worked its way deep into the U.S. consumer economy.
Mobile payments as part of mobile commerce are exploding
PayPal processed nearly $14 billion in mobile payments last year. That's a good proof of mobile catching on as a transactional platform. PayPal users are already able to pay at thousands of traditional stores by keying in their mobile number and a PayPal PIN selected online (or in their PayPal app). PayPal is expanding the program this year, in part through an alliance with Discover.
Overall, we can say that this time, when mobile payments are going to become important, is coming really fast.