The End of Physical Wallets?
2015 will not be the year that physical wallets are dumped in favour of NFC enabled smartphones, but it may be the year that mobile devices cross a mass-market tipping point that sees the fruition of multiple prerequisites that precede mass adoption. Deloitte has forecasted that about 5 percent of the 600 million NFC equipped smartphones worldwide will be used to make an NFC payment at least once per month during 2015. This is a major increase on 2014 figures where less than half a percent of the 450 million NFC equipped smartphones were used to make a payment.
Although these numbers suggest a massive boost to NFC smartphone payments, their use will not see significant mainstream NFC adoption in 2015. It will, however, mark a turning point in niche adoption which is a huge improvement on the insignificance of the user base which has existed thus far.
What the Major Retailers are Doing.
A significant boost to mPayments will come from just a few major US retailers who account for a significant amount of all payment volume. It will only take a small amount of these retailers’ enabling NFC smartphone payments to lead to an explosion in mobile payment volume. Despite some negative press, the mobile wallet, CurrentC, is being spearheaded by major US retailers such as: Walmart, Target, Best Buy, CVS, Shell Oil, Darden Restaurants, HMSHost, Hy-Vee, Lowes, Michaels, Publix Super Markets and Sears. The retailers involved account for over $1 trillion in annual transaction volume, so even a small push of the technology will lead to a large amount of payment volume.
Consumer Habits are Changing.
As more consumers are exposed to this new wave of technology and become acclimatised to it’s use to shop and pay, expectations in the ability to shop and interact on smartphones will become normalised. New technology, such as biometric authentication, will add new beneficial layers to the retail experience for both the merchant and the consumer, with Visa and MasterCard currently planning to migrate their online password towards biometric authentication. It is estimated that by 2024, all eCommerce transactions will be verified by some sort of biometric method.
With retailers continually reacting to expectations and demands of consumers and new technologies, mobiles will serve to bridge the gap between the online and offline world. Technological change is happening at breakneck speed, and the onus will be on merchants to adapt in the coming years. The GSM Association has predicted that smartphone adoption will reach 75% in Europe and North America by 2020, which is regarded as a conservative estimate by some industry experts.