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Mobile payments to tally just 1% of all U.S. consumer spending in 2019

Matt Hamblen | Nov. 18, 2014
Apple Pay limits its growth opportunities by not sharing spending data with merchants.

mcdonalds apple pay
Apple Pay is used at McDonald's.  Credit: McDonald's

The emergence of Apple Pay has led some technology early adopters to predict that mobile payments will dominate U.S. consumer spending in the next decade.

Yet the idea that most Americans will use a mobile wallet in 2025 is still a pipe dream, according to some expert analysis.

Forrester Research on Monday threw something of a wet blanket on mobile payment growth, calling it an "evolution -- not a revolution," in a blog.

In a separate report for its clients, Forrester said that the $142 billion predicted for mobile payment spending in 2019 will be "just a drop in the ocean of total U.S. consumer spending." Forrester predicted that all forms of mobile spending -- online, in-person and person-to-person -- will total only 1% of the annual $16 trillion consumer payments in the U.S.

Forrester analyst Denee Carrington nonetheless put a positive spin on that "drop in the ocean," saying there is still "tremendous opportunity for mobile payment growth."

The $142 billion in mobile payments predicted in five years is nonetheless a huge increase over the $52 billion spent in 2014.

In-person mobile payments, including Apple Pay, when used with NFC terminals, is the smallest category of all mobile payments but has the greatest growth potential, with grocery stores, restaurants and fast-food chains taking the lead, Forrester said.

In-person mobile payments will grow from $4 billion in 2014 to $34 billion by 2019, Forrester said, an annual growth rate of 56%, which makes it the fastest-growing category of mobile payments. The biggest success story in this category is Starbucks, with 16% of its transactions via mobile, totaling nearly 7 million transactions per week.

Still, Carrington noted that "broad-scale merchant acceptance has been hampered by a highly fragmented market and solutions that delivered limited merchant value." In addition, consumers have shown "apathy toward most mobile payment solutions."

While 19% of U.S. adults who are online with a mobile phone or tablet are interested in using in-person mobile payments, only 6% have tried it, Forrester said.

Carrington noted that there is also a lack of widespread merchant adoption of in-store mobile payments. Even Apple Pay, which launched in the U.S. on Oct. 20 with 35 retail brands, so far works in only about 220,000 brick and mortar stores in the U.S., or 5% of all available stores.

While Apple Pay has ignited enthusiasm for mobile payments, there are other options, such as Softcard, PayPal, LevelUp and Square Order that have made "for a highly fragmented and confusing marketplace," Carrington said. The Merchant Customer Exchange of major retailers such as WalMart and Best Buy is also expected to introduce a "CurrentC" mobile payment app in 2015.

 

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