The mobile in-store payments space is already crowded with a lot of different companies trying to get people to pay for goods in person via mobile.
But most consumers still aren’t biting.
People just don’t seem to see a compelling reason to use their mobile phone to make a payment over using a credit or debit card.
But at BI Intelligence, we think that mobile peer-to-peer (P2P) payments could act as a Trojan horse and finally get consumers to replace their wallet with their smartphone.
That’s because mobile P2P payment apps like Venmo and Square Cash offer consumers a compelling reason to use them. In particular, they provide a way for people to pay each other instantly, even if they don’t have cash or a check on them. That removes the need to go to an ATM or take a trip to the bank to deposit a check.
In a new report, we look at examples of where mobile P2P payments have already enjoyed enormous success, and which of the handful of P2P apps have the potential to catch on with consumers. We also look at why the limited revenue available to P2P apps is another good reason these companies may eventually offer mobile in-store payments.
Here are some of the report’s key findings:
- Peer-to-peer payment apps solve real pain points for consumers. Our high-end estimate is that mobile P2P transactions volume could reach $US86 billion in the U.S. by 2018.
- In emerging markets, there is especially huge potential for P2P payments made on cell phones, due to a lack of financial infrastructure. A high proportion of the population in these markets lack access to checking and savings accounts.
- Kenyan telecom Safaricom provides an excellent case study for the success of mobile P2P payments in emerging technology markets. The telecom has a product called M-Pesa, which allows its users to transfer money to one another via text message. Largely as a result of M-Pesa’s success, an impressive 92% of Kenyans say they have used mobile P2P payments.
- Mobile P2P payment services are usually free or next to free to use, which begs the question of how they will be monetized. Different services have experimented with fees and even advertising. But mainly, these services will serve as Trojan horses to gain user trust for mobile-based transactions.
In full, the report:
- Forecasts transaction volume for mobile P2P payments through 2018 and gives an estimate for the size of global P2P payments.
- Explains the value of mobile P2P payments to consumers and why there is such a compelling case for mass adoption.
- Profiles ten companies’ P2P services that we think are indicative of the breadth of services on offer.
- Analyses the major obstacles that mobile P2P payments face, including interoperability and security risks.
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