From backend infrastructure to soaring consumer use to new players getting into the market, the mobile world is shaping the future of payments.
- Merchants are investing in payments experience—$1 billion to $1.5 billion was spent for the development and installation of the system for paying through wristbands at Disney.
- PayPal is still alive and kicking—PayPal processed approximately $145 billion in 2012. Even then, On November 23, 2013, for the first time ever, Bitcoin surpassed PayPal in average transaction volume.
- According to VISA, by 2020, more than 50% of all payments made in Europe will be done through a phone device.
Backend infrastructure and transactions for banks, interbank, and networks are unimaginably huge:
- Fedwire, the organization that handles large-scale wholesale transfers, processed 132 million transactions for a total of $599 trillion.
- Bank of America processed $244.4 trillion in wire transfers.
- The Automated Clearing House (ACH), an electronic network that batches credit and debit transactions, processed 21 billion transactions with a total dollar value of $36.9 trillion.
- The European payments council has introduced SEPA, the Single European Payments Area, to harmonize payments across Europe. The migration to SEPA compliance for all companies within the Eurozone has been estimated at a staggering EUR 60 billion a year in payments processing.
New kids on the block:
- According to blockchain.info, a $150 million Bitcoin transaction happened on November 22.
- Square is now processing $15 billion in transactions on an annualized basis, or $41 million in payment volume per day.
- According to an upcoming report by Knowledgefaber, investors have shelled out more than $1.3 million in just 42 payment startups. Total funding received globally is more than $1.8 billion.
- According to PayPal, $307 billion will be spent on cross-border shopping by consumers in 2018. The figure stood at $105 billion in 2013.
- According to estimates by McKinsey, Internet retail sales in China are expected to reach $395 billion in 2015, three times the total in 2011. Alipay accounted for 48.3% of business in the online payment market, while TenPay occupied another 20.1%, according to iResearch’s statistics for the first quarter of 2013.
- Germany has a thriving and highly developed online payments market. According to a report from the German trade agency Germany Trade & Invest, the e-commerce market in Germany is estimated to grow from $36.8 billion in 2012 to $44.7 billion in 2017 at a CAGR of 21.4%.
- 8 cents for every US dollar is spent at Walmart. There is tremendous scope for mobile payment innovation clubbed with customer analytics and targeted marketing.
- The lottery sales in China have grown at a CAGR of 33% from 1987 (year of launch) to 2012, according to agtech.com. According to the Ministry of Finance, China’s lottery sales reached $32.36 billion in August 2013. This figure was up 17.6% or $4.8 billion for the same period last year. Global payment players like Danal and local players are going to enable payments to be made on the private online lottery via mobile payment solution.
- The Indian retail industry is estimated to be $450 billion, out of which only $30 billion comprises the organized sector. Internet retail or e-commerce is a small fraction of that, but growth is exponential.
- Mobile commerce is estimated to reach $278.9 billion by 2018, up from $13.8 billion in 2013, according to PRWeb.
Old is gold:
- NXP Semiconductors posted a revenue of $4.36 billion in 2012. On September 23, 2013, the company announced that it had shipped over two billion SmartMX™ secure microcontroller chips to the growing chip-enabled payment and government identity card markets. This is one of the biggest gainers in the New Payments world.
- According to a report from RBR, the number of ATMs is set to grow from 2.6 million in 2012 to 3.7 million ATMs by 2018 globally (amidst all the mobile payments razzmatazz)
- According to research by Mercator Advisory Group, since 2009, the money loaded onto prepaid cards has doubled from $57 billion to over $113 billion.
Fraud and risk:
- Earlier this month, hackers accessed old email accounts that belonged to the owner of Australia’s Inputs.io, a service that provided users with software to manage their Bitcoin addresses, and stole 4,100 bitcoins, or nearly $1.6 million.
- Total fraud loss in global payments was $11.2 billion in 2012, which is up 14.6% from 2011, according to a Nielsen Report.
Love you, love you not—dilemma on certain technologies continues:
- Tap and go payments enabled through mobile devices with Near Field Communication (NFC) technology are gaining widespread momentum, with nearly 50% of all smartphones launched by 2015 to be NFC-enabled. This would mean that 1 billion NFC-based handsets will be sold worldwide by 2016, which will support $50 billion worth of transactions; approximately 15 billion NFC tickets will be delivered to mobile devices worldwide by 2014, according to a report by AT Kearney.
- According to Biometrics Research Group, more than 700 million users of biometrics technology will spend over $750 billion in annual transactions. It’s only now, after Apple brought its fingerprint tech in iPhones, that biometrics got attention again.
- According to the World Bank statistics, more than $120 billion was remitted from the US in 2012, and these money transfers are growing at a CAGR of 8%.
- The World Bank estimates show that the international remittance market has grown 11% from 234 billion in 2004 to 534 billion in 2012 & is expected to grow to $685 billion by 2015.
- According to the World Bank, 3% of the world’s population (215 million) resides outside their country of birth. Immigrants in the US alone will end up transferring money worth $515 billion to their respective countries by 2015.
- Between 2001 and 2012, the Indian migrant population increased by nearly 2.4% to reach 22 million in 2012. However, the inward remittance in India during the same period increased even more by 15.5% to reach $70 billion.
The unusual suspects:
- Banks and carriers are coming together. Tie-ups and joint efforts are key to payments, and here is one of the biggest examples. 2Degrees is a new mobile telephony company in New Zealand. 2degrees has secured a $165 million credit facility from the Bank of New Zealand and offers mobile payments on top of telecom services.
- Apple has over 500+ million user’s card details stored on its App Store and iTunes. Since its founding, users on the iTunes store have downloaded over 25 billion songs and 40 billion apps. According to IFPI (International Federation of the Phonographic Industry), in 2012, revenue recorded through the iTunes store was $16.5 billion.
- One out of four Indians is expected to possess a Unique Identification (UID) number by 2014. Even as the mandatory adoption of the Aadhaar-linked Direct Benefits Transfer (DBT) scheme has dealt a blow, the government is ready to roll out its new system. Wherein mobile to mobile payments could be made through the Aadhaar Card or Unique Identification number. This could turn out to be one of the biggest payments systems in the world.
Mobile shapes the payment future:
- The mobile QR code & barcode redemption market is estimated to cross $50 billion globally by 2017, according to Mind Commerce.
- The mobile money market is expected to grow to $721 billion by 2017, according to Gartner estimates. It's no wonder that everyone from big players like PayPal, Google, ISIS to startups such as ZooZ, Clutch, Corduro, and CloudZync are all rushing to grab a share of this market.
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