NEW YORK.—A new report indicates that mobile payments are quickly changing how transactions are being conducted, and that the underbanked are playing a big role in the rapid adoption of the payments platform.
A report from Business Insider indicates that mobile payment volume in the United States is projected to increase at a five-year compound annual growth rate of 172%. By 2019, mobile payments will make up nearly 15% of the total payment volume in the United States, accounting for $818 billion in transactions.
The study points out that Apple Pay is providing well-documented lift, but just as important in the rise of mobile payments is the use of the service by the underbanked and unbanked.
Unbanked and underbanked spenders have easily adapted to mobile payments, because they allow for fast transaction processing and easy financial management, pointed out LowCards.com CEO Bill Hardekopf.
Walter Isaacson, CEO of Aspen Institute, was quoted in a Lowcards.com report saying, "It takes four days to move money sometimes if it's just an average person [trying] to use things like checks and credit cards that have transaction costs. Those inefficiencies will spur the continued rise of mobile payments and digital currencies, which will eventually disrupt the banking sector."
According to research from re/code last September, approximately 68-million U.S. citizens do not use a bank. That equates to nearly 22% of the population. “These people still need a way to cash checks, pay for purchases, and manage their money, even if they are not looking to traditional banks for that support,” noted Hardekopf, whose company is based in Birmingham, Ala. “Mobile payment platforms bridge the gap, which is why this group of people is expected to propel the growth of mobile payments in the next few years.”
This shift to mobile payments has been in the works for years,” pointed out Hardekopf. “In March 2012, a Federal Reserve study found that 20% of Americans used their phones to access their financial accounts. An additional 20% of participants said they planned to use mobile banking at some point in the future. Now these users are moving over to mobile payment platforms, and they will completely change the transaction industry.”
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