Are Mobile Payments The Future Of Spending?
Talk of the “cashless society” has been rife for some time, but those of us who grew up in a world where cash was king have chosen to consign the concept to a distant and unimaginable future. It now seems that future is closer than we thought.
In February, The Guardian reported the UK would move beyond “peak cash” this year, with debit cards replacing notes and coins as the most frequently used payment method, according to UK Finance, the trade association for the UK banking and finance industry. In 2006, 62% of payments in the UK were made using cash; in 2016, the figure had fallen to 40%; in 2026, UK Finance predicts cash will be used for just 21% of payments.
These findings backed up research conducted by Forex Bonuses in 2017, which predicted cashless societies might exist as soon as 2022 and placed the UK third in a list of The World’s Most Cashless Countries.
It seems cash is on the way out. But does that mean mobile payments are on the way in? eMarketer’s latest report on proximity mobile payment users worldwide – those who have used a mobile phone to make a payment at a physical point of sale (POS) terminal – states “adoption in parts of Western Europe has been held back by strong contactless card usage”. But with 34.9% of smartphone users older than 14 making at least one proximity mobile payment in the last six months – a figure eMarketer predicts will rise to 39.8% by 2021 – it can only be a matter of time before mobile payments replace debit cards.
Last year, Visa’s Annual Digital Payments Study showed 77% of Europeans used their mobile phones to bank and make everyday payments, with 68% having used a digital wallet, a card-on-file service or a mobile payment service in 2017, up from 63% in 2016. Unsurprisingly, mobile payments were most popular with Millennials, with 86% using a smartphone, tablet or wearable to manage money or make a payment in person, online or in-app.
In Europe, Sweden is leading the charge, with cash payments accounting for less than 2% of the total value of transactions, a figure that is expected to decline to less than 0.5% by 2020. “In the not-too-distant future, Sweden may become a society in which cash is no longer generally accepted,” according to Sweden’s central bank, Sveriges Riksbank. Swish, a mobile payment app launched in 2012, has 6.2 million users in Sweden, more than 60% of the population.
Beyond Europe, Africa boasts what was perhaps the first mobile payments success story. The majority of the population of Kenya is subscribed to a mobile payments service, with M-Pesa, launched back in 2007, the most popular. M-Pesa has 18 million active users in Kenya and almost 30 million active users in the 10 countries where it is available: Albania, Democratic Republic of Congo, Egypt, Ghana, India, Kenya, Lesotho, Mozambique, Romania and Tanzania.
The US is lagging behind. “Despite all the buzz and excitement, mobile payment in stores still hasn’t gained much steam in the US,” writes Yahoo Finance reporter Krystal Hu, quoting a report from New York-based research and advisory firm 451 Research suggesting mobile transactions accounted for $1 out of every $100 spent in US stores in 2017.
In Asia, South Korea’s central bank, the Bank of Korea, is planning a cashless society by 2020, according to The Korea Times. But it is China that is in the midst of a mobile payment revolution. In comparison to the US, China is embracing mobile payments like a long lost relative. eMarketer predicts 77.5% of smartphone users in China will use their mobile phone to pay for a purchase at a POS terminal at least once every six months, compares with just 25.3% in the US.
“The Cashless Society Has Arrived – Only It’s in China,” declared a Wall Street Journal headline in January.
The mobile payments market in China is dominated by Alibaba Group and Tencent who have a combined 93% market share. In the third quarter of 2017, mobile payments in China totalled $4.7 trillion, representing 28% growth since 2016. Alibaba Group’s mobile payment service Alipay, which has 520 million active users, had 53% market share. Ten Pay, the mobile payment service on Tencent’s WeChat platform, which has 1 billion active users and is ubiquitous in China, had 40% market share.
China is ahead of the game when it comes to mobile payments, but surely it is only a matter of time before the rest of the world embraces what has the potential to be a truly transformative technology with the same enthusiasm and instigates the inception of a cashless world.
 The Guardian,  Forex Bonuses,  eMarketer,  Visa Europe,  CNBC,  Riksbank,  The Guardian,  CNN,  Yahoo Finance,  The Korea Times,  eMarketer,  The Wall Street Journal,  Forbes
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