Money on the Move


Mobile payments in the United States totaled just $640 million in 2012, according to Emarketer estimates, but that figure is expected to increase exponentially to more than $62 billion by 2016. While Apple’s new iPhone 5 didn’t include the near-field microchip necessary to facilitate “proximity” payments (those in which the buyer and smartphone are present at the point of sale and transfer money in real time), about 7 percent of U.S. smartphone users made some kind of mobile payment last year, and almost 50 million Americans will use their phones to make in-store purchases by 2016.


Adoption of mobile payment systems will begin with low-dollar purchases such as a cup of coffee; consumers will then extend mobile payment to purchases such as groceries, gasoline, and casual dining. The projected rate of adoption could accelerate or slow depending on merchant offerings, convenience, and consumer worries about security and battery life. The number of mobile-payment solutions coming online in 2013 will likely create buzz among consumers and merchants alike, but whether or not many merchants will shoulder the costs involved with mobile payment remains to be seen.


Not all “mobile wallets” will be strictly mobile, however. Google opened its once-smartphone-only Google Wallet, for example, to Web access to satisfy consumer wishes. A seamless experience is part of convenience—the top reason U.S. consumers would be interested in using a mobile wallet, according to a Catapult Marketing study released in April 2012—and offerings from PayPal, American Express, and Visa also function as fully digital payment systems. However, even the heaviest hitters in Web payment and credit-card processing have competition: Consumers in all demographic groups overwhelmingly trust their primary banks as payment providers, a 2011 study from AlixPartners says.