Will Contactless Payment Inflections Sustain?

One logical beneficiary of a pandemic-saddled year has been mobile payments. That cuts in two ways, as mobile payments piggyback on broader inflections in eCommerce, and as in-store shoppers are wary of touching things. The latter creates fertile ground for tap-to-pay methods like Apple Pay.

To validate these elevated levels for mobile “proximity payments,” eMarketer reports that U.S. in-store mobile payments grew 29 percent in 2020. In absolute numbers, 92.3 million U.S. consumers age 14 or older used proximity-based mobile payments at least once within a six-month period in 2020.

Leading the Charge

Beyond users, average spend per user is likewise growing. eMarketer projects 24 percent year over year growth from $1,973.70 in 2020 to $2,439.68 in 2021. Further out, it expects per-user spending to exceed $4000 by 2025, which is partly a function of the types of products available for mobile purchase.

Breaking this down further, proximity payments are most prevalent among younger consumers. Specifically, millennials account for about 40 percent of mobile payments users. eMarketer says that Gen Z will account for more than 4 million of the 6.5 million annual new mobile payments users through 2025.

As for who’s leading this charge, eMarketer pegs Apple Pay as the top mobile proximity-payments provider with 43.9 million users this year. The firm also projects that Apple pay will grow by 14.4 million users by 2025, which is the fastest growth rate of any provider. So it has the greatest volume and growth.

The second-place mobile payments provider isn’t even a “provider”: Starbucks. It has 31.2 million users, followed by Google Pay, with 25 million users. Samsung Pay trails with 16.3 million mobile payments users. Google pay is projected to add 10.2 million users by 2025 while Samsung Pay adds 2 million new users.

Sustained Activity

Speaking of projections, eMarketer expects proximity payments users to grow to 101.2 million this year. Further out, it believes mobile proximity payments will exceed half of all smartphone users by 2025. This outcome seems reasonable but will depend on several cultural factors in the uncertain post-Covid era.

In fact, this question of sustained activity hangs over several Covid-accelerated areas of tech. Though Cold-era conditions compelled mobile payments for all the reasons stated above, will those demand triggers dissipate when the virus itself does? More likely, consumer behavior has been at least slightly altered.

Speaking of near-future outcomes, what about other technologies that support “touchless” retail interactions. Those include AR for in-aisle product information and cashierless stores for avoiding checkout bottlenecks. Like mobile payments, these areas could have a key place in the Post-Covid retail world.

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