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Mobile payments: The secrets to their success

There’s no denying that the use of mobile payments is taking off, and Asia is leading the way.

According to PwC’s Global Consumer Insights Survey 2019, which covered 27 territories, China continues to see the highest usage, with 86 per cent of its population making payments with mobile devices in 2018.

Other countries in Southeast Asia are also embracing mobile payments. Vietnam saw the highest growth in mobile payments usage in the past year, with the proportion of consumers using these payment methods increasing by 24 percentage points in 2018 to reach 61 per cent.

Of the other Southeast Asian markets included in the survey, Thailand saw 67 per cent of its population use mobile payments, followed by the Philippines and Indonesia (both 47 per cent), Singapore (46 per cent) and Malaysia (40 per cent).

In Europe, the use of payments on smartphones, tablets and wearables is also rising. While lagging behind Asia, the UK and Scandinavian countries are leading the way, particularly in terms of making mobile payments in physical shops.

Emerging economies are also demonstrating a healthy appetite for mobile payments. The percentage of people using Google Pay, Apple Pay and Samsung Pay in Russia is already in double digits.

So what’s behind this impressive uptake of mobile payments? Here are some of our thoughts on what the key drivers are.

To start with, smartphones are now ubiquitous. Just over a third (36 per cent) of the world’s population was estimated to use a smartphone in 2018, up from about 10 percent in 2011, while the number of smartphone users is forecast to reach 2.5 billion this year.

In many parts of the world, the majority of people now have access to smartphones. If they can be used to pay for goods and services, as well as for phones calls, text messages and accessing the internet, they will be.

The fact that mobile wallets can be used in store, in app or on e-commerce websites is also driving their adoption. Like contactless card payments, paying with a mobile device improves the convenience and speed of paying for goods and services. Where mobile wallets are accepted at the point of sale, people will enjoy a streamlined payment experience.

It’s therefore unsurprising that one of the top payment-related initiatives for retailers in the next 18 months is to implement mobile payment, according to analyst house Forrester.

Another part of the appeal of mobile wallets is that they’re available in different forms to suit preferences of individual users. They include mobile-first wallets like Apple Pay and Google Pay, which are designed for mobile browser and in-app purchases. Then there are stored-balance and credit-card e-wallets, as offered by the likes of PayPal and Alipay. The other option is browser-oriented e-wallets, like Visa Checkout and Masterpass, which offer a browser checkout experience regardless of device.

However consumers want to conduct financial transactions via their mobile device, there is likely to be an approach that suits their needs.

With security a concern for consumers and businesses when using new methods of payment, mobile payments put these fears to rest: modern smartphones support security through various technologies – voice control, fingerprint scanning and facial recognition – that provide additional verification. Mobile devices can be used for two-factor authentication, which requires a password as well as a one-time code sent to the device.

There is also plenty of innovation taking place in the mobile payments space. Mobile payments can now be used on public transport in many cities, while they are also being used for things as varied as an SME payment service and toy vending machines.

In addition, there is increasing collaboration among mobile payment providers and other technology players.

For example, eBay is adding Google Pay to its suite of payment options as part of its move to intermediate end-to-end payments on its marketplace. In Japan, Line Corp (the operator of Japan’s most popular messaging platform) and Mercari (the provider of a used-goods online marketplace app) have joined forces to enable mobile payments for purchases made at stores that accept each other’s systems. They have also invited other mobile payment providers to joint their alliance.

As the saying goes, “if you build it, they will come”. With the growing mobile payments ecosystem, this certainly rings true.

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Mobile payments: The secrets to their success
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