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Two reports released Thursday point up the accelerating rate at which consumers are turning to a mobile device rather than a PC to pay an online merchant or another person. The news comes as major tech players like Apple Inc., Google Inc., PayPal Holdings Inc., and Samsung Electronics Co. Ltd. duke it out with financial institutions and with each other for dominance in the mobile-payments market.
The number of U.S. adults who have performed at least one mobile person-to-person payment in the past 12 months has reached 69 million, up 30% from 53 million last year and a 73% jump from 40 million in 2013, according to a new report from Javelin Strategy and Research, a Pleasanton, Calif.-based payments-research firm. That number will hit 82 million next year and reach 126 million by 2020, almost a 180% rise from the current level, the firm predicts in its report, “Mobile P2P Payments in 2015: The Growth And Adoption of Mobile Money Transfers.”
That rapid build-up in the ranks of mobile P2P users is attracting not just non-bank players like PayPal (which controls the popular Venmo P2P app) but also social networks like Facebook, Javelin notes. These players see integrating payments with conversations as a natural play, the firm says.
“Traditional payment organizations and financial institutions now compete with nimble newcomers and need to maintain design, experience, speed, and security in order to stay competitive. The payment industry is now face-to-face with an extremely active and social customer base,” says Michael Moeser, Javelin’s director of payments for retail and small business, in a statement.
Javelin’s study included surveys of more than 6,000 U.S. adults.
At the same time, though, neither banks nor tech players have figured out how to make money from P2P, whether on a mobile device or on a desktop. Many of the services are free, leaving little on the table for providers but crimping plans especially hard for financial institutions. “To the chagrin of many bankers, sending money person-to-person (P2P) has also gone from expensive to cheap or free. It is forcing many in the industry to rethink this revenue stream,” Javelin notes in its press release for the report.
A separate report from e-commerce gateway Adyen indicates more than 30% of online transactions flowing through its platform in the third quarter were mobile payments, up from 28.7% in the second quarter. The proportion in the U.S. market was 27%.
These mobile transactions are overwhelmingly performed on smart phones, Adyen reports in its latest quarterly Mobile Payments Index. The phones accounted for 66% of online mobile payments in the latest quarter, compared with 34% for tablets, which continue to decline as a mobile-payments tool. The tablet share was 36% in the second quarter and 38.2% as recently as the quarter ended March 31.
