Mobile Payments Quickly Changing the Transaction Industry
Mobile payments are no longer just a trendy way to make a payment. They are quickly becoming the major force in the transaction industry.
According to a report from Business Insider, 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.
Apple Pay and its early success is a significant part of this growth. But another factor is the use of mobile payments by the underbanked.
Unbanked and underbanked spenders have easily adapted to mobile payments because they allow for fast transaction processing and easy financial management.
“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,” Walter Isaacson, CEO of Aspen Institute, told CNBC. “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. 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. 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.