Digital Transactions Authoritative, insightful and timely information for payments professionals
While the U.S. market wrestles with its nearly 6-month-long transition to EMV chip cards and contactless payments based on near-field communication (NFC) technology, the rest of the world is surging ahead with contactless, online, and mobile transactions, according to the latest report from Juniper Research.
Total digital payments worldwide will reach $3.66 trillion this year, up 20% from 2015, according to Juniper’s forecast. Driving the surge are contactless payments, where consumers tap and pay at the point of sale with a card or mobile phone, and e-ecommerce, particularly buy buttons that enable purchases with one or two clicks.
While laptop and desktop devices dominate e-commerce spending, smart phones and tablets will overtake these devices for share of purchases by 2019, Juniper predicts. On the other hand, for all the publicity given to the emerging market for wearable payments—transactions enabled within wrist watches, clothing, fitness bands, and the like—wearables will still account for a tiny share of total digital payments volume, about 0.1%, by 2020, Juniper researchers figure.
The momentum for contactless payments around the world comes from the increasing deployment of NFC devices, the emergence of widely marketed third-party mobile wallets, and higher contactless transaction ceilings, according to the forecast. Payment cards will account for 90% of contactless transactions over the next five years, the research predicts, but the increasing availability of mobile-payments services will drive smart-phone usage at the point of sale.
Apple Inc.’s Apple Pay service has now entered four national markets since its U.S. debut in the fall of 2014, including the United Kingdom, Australia, Canada, and China, and is set to be launched in France and other countries by year’s end. Also, following on the heels of Apple Pay, Alphabet Inc.’s Google unit has launched Android Pay and Samsung Electronics Co. Ltd. has introduced Samsung Pay, both of which work on the Android mobile operating system.
At the same time, these wallets can be used for in-app transactions to buy from retailers. Merchants are also starting to make use of social media and buy buttons to stimulate more digital sales, the research says. Facebook and Twitter introduced buy buttons in 2014, with processing provided by Stripe Inc., followed last year by Pinterest and Instagram.
Juniper says the popularity of social media will help drive transactions on buy buttons. “From a retailer perspective, social media can be a powerful tool both from a reach and an engagement perspective,” the U.K-based researcher says in a white paper released Monday. “Most leading brands and retailers now have a significant presence on leading social media sites and offer options to share comments on purchased products (and wish lists) via social applications.”
Social media will also help propel person-to-person payments, the forecast says. Facebook has already introduced a P2P service on its Messenger app in the U.S. “We would expect additional deployments in other core markets over the next year or so,” says Windsor Holden, author of the Juniper report, in a statement.
