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What does the future hold for mobile wallets?
So we can safely assume that, over the coming years, the mobile channel will become an increasingly important part of the payments ecosystem.
As far as mobile wallets are concerned, there are many reasons why the future looks bright. However, it should also be remembered that there will be challenges for these products to overcome as they target widespread adoption.
Research firm Research and Markets released a report predicting that, between 2017 and 2021, the global mobile wallet market will expand at a compound annual growth rate of 35.5 percent. It cited the growth in use of mobile data and broadband around the world as a "major factor" supporting the growth of the sector.
"Mobile wallets are equipped with options like integration with coupons and tickets, which are making them highly popular among users," the company said in a press release. "In addition, users can also save their card and bank details on their smartphones and make payments and purchases easily. The increasing technological advances in NFC devices and growing security of payment portals are other factors driving the market growth."
According to eMarketer, US consumers completed approximately $27.67 billion worth of purchases on their phones last year. That's an increase of 183 percent on the previous year. Growth in the market will be fueled by growing availability, with Fifth Third Bank recently announcing that its customers will be able to make payments using all five of the major mobile wallets: Apple Pay, Samsung Pay, MasterPass, Android Pay and Microsoft Wallet.
Jimm Bell, director of consumer and small business payments at Fifth Third, said consumers are "rapidly adopting" mobile payments and the bank wanted to give its customers "every option available on the market today".
Barriers to growth?
There is clearly huge potential for the mobile wallet market to grow and deliver new, improved consumer experiences. However, like any emerging sector, there will be challenges for mobile wallets to overcome and questions to answer in the coming years.
In the Accenture 2016 North America Consumer Digital Payments Survey, consumers predicted a nearly 60 percent increase in use of mobile wallets by card networks and technology giants over the coming years. However, the research also showed that regular use of mobile payments remained flat at 19 percent last year. Summarizing its findings, Accenture said consumers "demand more to make the leap to mobile".
Bipin Preet Singh, the founder of MobiKwik, an Indian mobile wallet with 45 million users, said the future of the payments industry will be shaped by interoperable systems. "Wallets need to mature, evolve into something else and be interoperable to be relevant," he told the Economic Times.
Using a mobile brings the advantage of replacing PIN entry with some form of biometric, perhaps a fingerprint or a face scan or, if the phone is tied to a smart watch, a pulse pattern. As has been seen in trials by MasterCard and others these are popular with consumers and effective in authenticating the consumer. They can also provide a secondary cardholder verification for higher value transactions.
One thing that's clear is that mobile wallets - and the payments industry as a whole - will continue expanding and evolving in the coming years. There will be ongoing innovation from fintechs as well as established financial institutions, opening up new experiences and more choice for the consumer.