Mobile Payment Market

Market Overview

The global mobile payment market size was valued at USD 2375 billion in 2021. It is estimated to reach an expected value of USD 25536 billion at a significant CAGR of 30.2% during the forecast period (2022-2030).

Mobile payment is an alternative to outmoded payment systems that use cash, checks, or credit cards as the medium of exchange. Mobile payments permit customers to buy goods or services using wireless devices like smartphones, tablets, and others. In addition, mobile payments employ numerous technologies like NFC (Near Field Communication), SMS-based transactional payments, and direct mobile billing to advance transaction security and deliver hassle-free transactions.

The rise in smartphone saturation worldwide and the growth of the e-commerce industry in developing markets are the chief factors driving the market growth. Furthermore, the amplified adoption of mobile payment services in developing markets stimulates market growth. In addition, the market is projected to attain an advantage from an upsurge in the use of NFC, RFID, and host card emulation technology in mobile payments, as well as a rise in demand for quick and easy transaction services.

Market Dynamics

Market Driving Factors

Increased Global Adoption of Smartphones

In recent years, smartphone adoption rates have significantly increased in nations like Canada, China, and India. Additionally, the widespread use of 3G and 4G connectivity has enabled users to access services on their smartphones without any hassle. By the end of 2018, there were more than one billion 4G connections worldwide, up from 55% to 75% in places like the UK over the previous year. Smartphones are now reasonably priced thanks to advancing technology, making them accessible to consumers. Furthermore, these devices are now readily available to end users thanks to the smartphone industry's rapid expansion of its distribution network. Because of their widespread distribution across India, major mobile phones brands like Samsung, Micromax, and Karbonn, for instance, are popular among rural Indians who can access online services through their phones. Retailers and customers can now receive and make payments using their smartphones, which is driving the growth of the mobile payment market. This is due to the increased use of smartphones and faster connectivity.

Growth in the M-Commerce Industry

Due to the rise in smartphone adoption and quick connectivity, mobile commerce has experienced a boom over the past few years. Due to the convenience of ordering and receiving items at one's doorstep, consumers are increasingly choosing mobile purchases for various goods and services, including books, groceries, health & beauty products, apparel & accessories, and computer & electronics. Additionally, promotional offers and discount coupons made available by different merchants on m-commerce platforms entice customers to make mobile purchases.

It is projected that by 2019, 1.05 billion mobile coupon users will be there compared to 560 million in 2014. Mobile phones with internet connectivity provide access to several shopping sites; thus, consumers now opt more for mobile apps to make purchases. China, Mexico, and the U.S. are the three major countries where shopping via apps is more popular. Millennials are a significant target customer segment for the mobile commerce industry as they use their smartphones for search or purchases, which propels the growth of the mobile payment market.

Market Restraining Factors

Increased Data Breaches and Security Concerns in Mobile Payments

Innovative payment technologies provide considerable benefits and convenience to customers; nonetheless, an upsurge in data breaches and security apprehensions impedes the market growth. Consumers are cautious about making or receiving payments via their mobile phones because they are worried about third-party mobile service providers retrieving their financial information. Furthermore, mobile payment service adoption is rapidly growing; conversely, the risk of identity theft and data breaches is also predicted to escalate in the upcoming years. This is due to public Wi-Fi, password vulnerabilities, and phishing attacks. These factors create high risks when making mobile payments, limiting the market growth.

Market Opportunities

Increase in Use of NFC, RFID, and Host Card Emulation Technology in Mobile Payments

Near-field communication (NFC) and radio frequency identification (RFID) are integral parts of other mobile and contactless payments. Many mobile device manufacturers such as Apple, Samsung, and Huawei are integrating NFC and RFID technologies into developing their contactless cards and mobile devices, which is anticipated to offer remunerative opportunities for growth in the global market. Furthermore, various companies are adopting NFC and host card emulation technologies to provide their customers easy access to products displayed on their smartphones. For instance, KFC (Kentucky Fried Chicken) in 2019 in the UK launched an NFC-based advertisement campaign. The campaign's primary aim was to promote its Hot Shots Meal Box. With NFC-based technology, customers can place their orders by tapping an LED screen. KFC started this service to promote home delivery services and increase the adoption of contactless payment systems. Moreover, companies are implementing host card emulation technology in their mobile devices to empower them and improve the performance of various mobile devices, thus proving to be a potential growth opportunity for the market.

Regional Analysis

Region-wise, the global mobile payment market is analyzed through North America, Europe, Asia-Pacific, and LAMEA.

Asia-Pacific dominates the entire global market and is expected to grow at a CAGR of 31.2% during the forecast period. Mobile payment is witnessing significant growth in Asia-Pacific, owing to increased mobile commerce. Adoption of mobile payment in India is on the rise, attributable to growth in the youth population active on online media. Countries like Australia and Singapore are on the verge of becoming cashless markets, increasing mobile payment adoption. Mobile payment service providers such as Paytm, Mobikwik, and Google wallet have started to expand in emerging markets of Asia-Pacific along with special discount offers to leverage the potential. The rise in disposable income and active participation of people on online social media fosters the mobile payment market growth in this region.

The North American region holds the second largest market and is anticipated to reach USD 3540.55 billion by 2030 at a CAGR of 28.3%. North America includes the U.S. and Canada. Growth in the use of smartphones for internet usage in day-to-day activities contributes to developing the mobile payment market in this region. In addition, an increase in awareness of mobile payment and secure & convenient transactions are the major factors that influence the growth of the mobile payment market in this region.

Europe is the third largest region. The European population prefers to use cash for various payments; however, the region also possesses the mobile payment market potential. The mobile payment market situation varies in this region as countries within the region are at different adoption levels. The UK has high growth potential for this market. The expansion of the market players in this region has further increased the competition. Starbucks has also launched its Mobile Order and Pay system in the UK to cater to customers' demand for quick and hassle-free services. Retailers use contactless technology and install POS terminals that accept mobile payments to make an easy and secure payment. The rise in penetration of smartphones in the region drives customers to access various services online via their mobile devices. In addition, the availability of 3G and 4G services, coupled with the use of smartphones among the young population, further boost the market growth. Furthermore, the increase in different innovating applications and the rise in penetration of smartphones among end users has led to a high number of payment app users, propelling the market's growth.

Segmental Analysis

The global mobile payment market is segmented by type, transaction mode, end-user, purchase type, application, and region.

Based on payment type, the global market is bifurcated into proximity and remote, where the remote segment holds the largest market share. The remote segment dominates the market and is projected to grow at a CAGR of 31.5% during the forecast period. Remote payment takes place without retailers and customers being in the exact location, using mobile phones, websites, or text messages. It provides safe and secure payment gateways. Remote mobile payment systems are expected to develop as technology advances, boosting market growth.

Furthermore, the widespread adoption of this payment method in industries such as IT, retail, telecommunications, hospitality, and healthcare is expected to drive market growth in the future. Key market players are launching new services, which is accelerating market growth. This service offers consumers a convenient payment solution, boosting the market growth.

The proximity segment is the second largest. Proximity mobile payments, which are initiated from a mobile phone, are made to a merchant. Waving a mobile phone equipped with barcodes or near-field communication (NFC) technology near a merchant's point-of-sale device is all required to make these payments. They necessitate supporting technological architecture, but their immense utility in making payments easier, safer, and convenient for customers drives their worldwide demand. The introduction of mobile point-of-sale (mPOS) solutions is expected to encourage SMEs to accept mobile-based payments, thereby fueling market growth.

Based on transaction mode, the global market is divided into mobile web payments, near-field communication, SMS/direct carrier billing, and others. Among these segments, the mobile web payments segment dominates the market.

The mobile web payments segment grasps the most significant market share. It is anticipated to grow at a CAGR of 28.1% during the forecast period. Mobile payments employ the wireless application protocol (WAP) facility on smartphones to connect to the internet and then make essential payments for obtained goods and services using an online payment method, such as mobile wallets. WAP payment is projected to grow in popularity in the upcoming years as people begin to shop online due to its easiness of use and convenience. To make payments, customers use a web page or must download additional applications on their mobile phones. Consumers can make easy and convenient online payments by downloading applications that allow them to do so. Such factors contribute to segment growth.

End-user-wise, the global market is divided into personal and business. The personal segment dominates the market and is expected to grow at a CAGR of 30.6% during the forecast period. Mobile payment service providers provide a variety of payment applications for iOS and Android devices that permit users to pay online and transfer money digitally. Furthermore, it enables customers to recharge mobile phone accounts, settle personal loans, and purchase services such as software licenses, online game cards, and airline and movie tickets. Numerous initiatives launched by governments worldwide to raise the penetration of electronic and mobile payments among individuals and households are estimated to deliver profitable opportunities for market expansion.

Based on purchase type, the global market is categorized into airtime transfers & top-ups, money transfers & bill payments, merchandise & coupons, travel & ticketing, and others. The money transfer and bill payments segment holds the most significant market share and is expected to grow at a CAGR of 29.2% during the forecast period. Money is transferred and paid for using mobile phones in mobile money transfer and payments. This service converts cash to electronic transactions and provides basic payment solutions to the under-banked population. Several mService providers have integrated new e-wallet services for their agents to assist them in providing various services to customers, such as purchasing airtime for top-ups, processing bill payments, money transfers, and banking services. Furthermore, new entrants such as mobile network operators, e-commerce companies, retailers, payment service providers, money transfer operators, and card companies are heavily investing in the digital payment industry, stimulating market growth.

By application, the global market is segmented into media & entertainment, energy & utilities, healthcare, retail, hospitality & transportation, and others. The retail segment holds the largest market share and is projected to grow at a CAGR of 28.5%. To provide a personalized experience, retail stores primarily use proximity mobile payment via their preferred mobile wallet or app. Furthermore, mobile payment logos are displayed on retailer POS counters. Moreover, the market is growing due to increased digitization in e-commerce sectors and the availability of e-commerce stores on mobile phones.

Recent Developments

• June 2022- Google LLC launched a new way of accessing billing information from the Cloud Console mobile app.
• March 2022- Mastercard, DBS Bank, and Pine Labs have partnered to launch ‘Mastercard Installments with Pine Labs’ - a new program that allows DBS/POSB credit cardholders to pay via interest-free installments at merchants with the ‘Pay Later identifier.