A Note From Our Sponsor, MasterCardThe launch of Apple Pay is a significant milestone for mobile payments, but mobile payments don’t start or stop with Apple Pay. MasterCard has been a pioneer of mobile commerce innovation for years -- including the world’s first contactless and mobile payment solutions. In bringing Apple Pay to consumers, Apple wanted to deliver the highest quality transactions possible. So, who did they turn to? MasterCard, a technology company that has been leading the way around contactless, digital payments and the most secure payment experiences.In 2005, MasterCard deployed its own use of Near Field Communication (NFC) technology to turn nearly anything into an instant and secure form of payment, which meant that your smartphone, bracelet, watch or keyfob could replace your wallet. This year, MasterCard contactless-enabled cards and devices are available for use at approximately 2.5M merchants worldwide, a 108% year-over-year increase. On the consumer side, the number of “unique tappers” worldwide increased 67% year-over-year. And consumers are spending more through contactless payments; in Q2, total tap spend increased 145% year-over-year, while total tap transactions increased 129% YoY. MasterCard also just announced a contactless-enabled credit card equipped with a fingerprint scanner, to add an extra layer of authentication and security to your transactions.Watch the video below to learn how MasterCard's contactless payments work.
The State of Mobile PaymentsApple's foray into contactless payments has put "mobile payments" on everyone's lips, even though the industry has been growing steadily over the past few years. Purchases made using a smartphone or tablet rose 48% year-over-year to $8 billion during the second quarter of 2014. That growth is 3x that of desktop ecommerce, and it’s the swiftest increase in mobile spending since Q1 of 2012. By 2020, mobile commerce will account for more than 75% of the world's online transactions, and more than 50% of spend.In other words, mobile payments are hot.Samsung has long held its NFC offerings over Apple’s head, but Apple’s Sept. 9 announcement not only introduced NFC to the iPhone lineup, but also Apple Pay, which launched Monday in the United States. It's good timing, too, as U.S. mobile commerce is expected to hit a record $114 billion by the end of the year.Apple Pay -- which combines near-field communications with Touch ID biometrics and tokenization (via programs such as the MasterCard Digital Enablement Service) for secure, contactless payments -- may be the tipping point that helps reluctant consumers take the mobile payment plunge. The two-step authentication process is seamless and secure, and even easier than removing a credit card from your wallet.While today’s launch is exciting for iPhone owners, it must be reiterated that Apple is neither the first, nor the only player in the mobile payments space. Many established technology companies and payment startups have played in the space for years, forcing changes in consumer behaviors and helping people warm up to storing their precious credit card information on a smartphone.Below, we explore the mobile payments industry, from its major players, to consumer sentiments and behaviors to the businesses that are transitioning to these high-tech payment systems.Is the wallet dead? Not yet. But it’s nice to know you can still buy lunch if you forget it at home.
Consumer HabitsIf you're still not sold on the idea of mobile payments, these consumer behavior statistics might change your mind. Teens: As teens become more reliant on smartphones and social networks, they've quickly adopted mobile payment services such as Venmo, Square Cash and Google Wallet for peer-to-peer payment, making split dinner bills or IOUs easier than ever before. Per a Pew Research Study on teen cellphone ownership, 78% of teens aged 12-17 own a cellphone, and almost half of those (47%) own a smartphone. Those statistics have driven teen-focused retail stores such as Wet Seal, Urban Outfitters and H&M to mobile engagement to foster relationships between the brands and their teen shoppers. Though teenagers' money is likely to be a cash allowance from mom and dad, these digital natives are often spending the money digitally. Millennials: Unsurprisingly, millennials have becoming the quickest adopters of mobile payment, with 55% of mobile payments made by smartphones owners 18-34 years of age. A recent ComScore study shows that 81% of U.S. millennials owned a smartphone by the end of 2013 vs. 68% of 35-54 year olds and 40% of people aged 55 and up. It's likely that many millennials who weren't early adopters of the mobile payment trend will hop on the bandwagon in the coming year. In fact, 20% of millennials haven’t made a cash purchase over $20 in the past 30 days according to a 2010 study by CreditUnions.com — and that number is surely larger now.Moms: Don’t put all of your eggs in the proverbial millennial basket, moms are another key consumer demographic — accounting for more than 70% of U.S. household spending. That same study shows that 89% of moms say their smartphone is by their side most of the time, and 42% of those mothers report that they reach for their smartphone first thing in morning. Always proponents of convenience, moms combine purchasing power with smartphone savvy, making them top mobile payment users.Image: Getty/Dougal Waters
Brick-and-Mortar Businesses Embracing Mobile PaymentsAs the number of mobile payment options grows, many mom-and-pop shops -- even ones that had previously been cash-only -- have embraced mobile commerce. Although the prospect of developing a mobile app might be daunting, mobile apps help businesses glean important consumer insights and run efficient loyalty programs. Instead of customers having to keep track of punch cards for every restaurant or cafe they frequent, everything can be stored in their mobile phone instead — which makes their lives and daily spending more seamless and convenient.
Image: Grub Street
This article is presented by MasterCard.
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