Mobile payments will bring economic benefits, says Cebr

Consumer adoption of mobile payments is expected to help reduce fraud, lower transaction costs and generally bring a wider range of economic benefits, according to a new report published this week.

The study from the Centre for Economic Business Research (Cebr), which was commissioned by new mobile payment solution provider Zapp, predicted that 20 million adults will use their mobiles to pay for goods and services by the end of the decade.

The value of purchases is expected to triple from current levels to £14.2 billion in 2018, too, although VocaLink figures indicate that this could be around £18.1 billion when all mobile transactions are included, such as bank-to-bank transfers.

Cebr said that, by 2020, mobile payments will represent 1.4% of total consumer spending, bringing benefits in four key areas: reducing fraud; lowering transaction costs; putting consumers in control; and reducing cash-flows.

With fraud, for example, the report indicates that secure mobile and other payment systems requiring PIN identification have the potential to reduce card ID fraud significantly. In addition, it would also mean the declining use of cash, where one in 36 £1 coins in circulation are estimated to be counterfeit.

Douglas McWilliams, Cebr executive chairman, said: "It's clear that the UK economy stands to benefit in multiple ways from the widespread adoption by consumers of mobile payments.

"But for the full potential to be unlocked, consumers need to be reassured that mobile payments are hassle-free, safe, secure and widely accepted. That will require strong cooperation across the financial services, retail and payment industries."

In separate but related research, which was released today by GFT Technologies, it was suggested that one billion people around the world will be carrying out online financial transactions or engaging in mobile banking by 2017.

However, concerns over fraud are reportedly dictating the adoption rate of mobile banking, and mobile banking usage differs considerably country by country.

The GFT Study indicated that, in Spain and Brazil, over 60% of respondents said they already use mobile banking solutions, while only 26% of German customers use their smartphones for that reason. The UK was found to sit in between these two extremes, with nearly 40% of respondents having adopted mobile banking.

Marika Lulay, chief operating officer at GFT, commented: "The bank that customers opt for will be largely dictated by the mobile banking options offered.

"The traditional banks will really feel the pressure placed on them by the direct banks and the providers of digital wallets, or in-app billing options."

Tipping point for mobile payments in general has been mooted for some time, but it is widely accepted that next year will see some major developments in terms of mobile wallets. At present, it is quite a crowded space but there are a number of vendors pushing their products and investing time and money into mobile payment technology, which suggests that greater adoption is on the horizon.

One company gaining ground in recent months is Zapp, which will officially launch next year and aims to put real-time payments on people's mobile phones through their existing mobile banking application. A wholly-owned subsidiary and part of the VocaLink group, Zapp is one of the businesses touted for success in the mobile payments battle set to unfold over the coming years.

Commenting on the recent Cebr research, Zapp CEO Peter Keenan said: "The report's findings are fascinating as they're the first to take a holistic view of the economic impact of mobile payments.

"It is easy to become fixated simply on the monetary value of payments that will be made over mobiles – this report shows there are much wider benefits to consumers, businesses, and the Exchequer.

"At Zapp, we're building a comprehensive alliance of financial institutions, retailers and merchant acquirers and we're confident that as a result we will play a major role in unlocking these benefits when we launch to consumers in 2014."

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