Analysts at Juniper Research say the value of digital and physical goods purchased via mobile ‘OS-Pay’ platforms will increase by fifteen times in the next two years.
More specifically, a combination of in-app purchases and website retail payments is projected to drive annual spend via Apple Pay and Android Pay to $8 billion in 2018, up from $540 million this year (2016). In addition, more than 85% of remote goods payments are forecast to be made using mobile devices in 2021.
According to Juniper, the integration of OS-Pay into apps will be a ‘no brainer’ for developers looking to reduce buyer friction, where password entry on smartphones remains cumbersome. Indeed, Staples recently confirmed that over 30% of its iOS app users already make in-app purchases via Apple Pay. In addition, more than 85% of remote goods payments are forecast to be made using mobile devices in 2021.
“It is clear that even in markets where PCs and laptops have a high installed base that the smartphone is playing an increasingly important role where remote goods purchases are concerned,” Steffen Sorrell, a senior analyst at Juniper, stated in a new report. “For merchants, this means that the buyer experience must be made as frictionless as possible – from product search and discovery to purchase.”
As Jason Ward of EMC notes, the movement towards mobile payments has been a “disruptive trend” in the banking sector, with new payment services accelerating the shift away from cash.
“Mobile payments can take many forms, including device initiated credit and debit transactions, digital wallet transactions and peer to peer payments,” he explained. “The opportunity they present is significant – the market for mobile payments is estimated to be worth US $2.8 trillion by 2020. However, with so many new players entering the market and looking to capitalize on this opportunity, retail banks will need to adapt in order to beat the competition.”
In order to succeed, says Ward, mobile payment systems will have to solve multiple issues that have obstructed adoption in the past.
“Technology can also help here. For example, new biometric technologies like fingerprint scanning and facial recognition are already enabling safer transactions,” he added. “In fact, Juniper Research predicts there will be nearly 770 million biometric authentication apps downloaded per year by 2019.”
Indeed, Samsung’s recently launched Galaxy Note7 features iris scanning along with fingerprint recognition capabilities. According to Asem Othman, a biometric scientist at Hoyos Labs, iris scanners will likely reach Apple’s phones in 2018.
“Unlike fingerprints, capturing the iris biometric is like taking a picture, and facial expressions and aging effects cannot easily alter its pattern,” Othman recently told IDG’s Agam Shah. “I think due to size and price limitation, adding this sensor to phones requires time.”
Meanwhile, Dr. Vinod Chandran of the Queensland University of Technology told News.Com.Au iris scans are the “best-performing” biometric scans that can be done in real time.
“Speed-wise, fingerprint scanners work at the same rate but security-wise there’s a big difference between fingerprints and iris scans,” he confirmed. “With fingerprints, there’s about a 1 in 1000 chance of a duplication. With the iris, it’s about 1 in 100,000 or even one in a million. The iris has a very different type of texture and pattern [so] spoofing it is very difficult.”
Although the mobile payments sector is still evolving, frictionless commerce promises to usher in an exciting future. When combined with technology such as augmented reality (AR), Bluetooth beacons and advanced biometrics, mobile payments will allow retailers to positively disrupt an outdated paradigm and significantly bolster engagement with shoppers.