HAMPSHIRE, U.K.—The number of mobile wallets using contactless technology is expected to reach 200 million by the end of 2016—growth of more than 100% from the end of 2014—according to a new study.
The report from Juniper Research found that while historic growth of mobile wallet usage was driven by P2P services for the unbanked in developing markets, the launch of Apple Pay has prompted a “hive” of activity in the contactless arena. The report says that with public awareness of contactless heightened in the wake of Apple's launch, competing services such as Samsung Pay and the forthcoming Android Pay would no longer need to seed the market.
The study, Mobile Wallets: Contactless & Remote Payments 2015-2020, also found that numerous banks were partnering with Visa or MasterCard to implement own-brand contactless wallets using a cloud-based secure element.
The research observed that MCX (Merchant Customer Exchange) had postponed the launch of its own contactless service, with several retailer partners now abandoning their “closed shop” stance towards Apple Pay. Furthermore, MCX has not agreed to terms with any leading cardholders, citing the high transaction fees as a stumbling block.
“By the time MCX launches, U.S. consumers will have a choice of perhaps half a dozen other mobile wallet solutions, not to mention the fact that an increasing number will also have contactless payment cards,” stated Dr. Windsor Holden, who authored the report. “In addition, the reliance on store brand payment cards could ultimately be a fatal flaw for the service.'
Other key findings:
- Wallets run by mobile operator consortia continue to fare badly, with the U.K.'s Weve dropping its planned wallet, and Softcard folding in the U.S.
- In developing markets, there has been a significant upscaling of wallet usage for savings and loan disbursements, while more than 100 million are now in use for micro-insurance