London, 4 June 2015: Smart devices on track to replace cash and cards as UK mobile payments projected to hit over £1.2bn a week by 2020. So says Jeremy Nicholds, Executive Director for Mobile, Visa Europe.
Visa’s latest predictions
Despite many false dawns, UK mobile payments is predicted to grow three-fold over the next five years as savvy shoppers embrace new options and spend more on mobile, with one in four consumers estimated to spend more than £50 a week on mobile by 2020.
British consumers driving the change
Nicholds believes the UK is moving towards a “cash-last” society as one in four Brits expect to use their mobile phone to make payments on a daily basis by 2020, growing from the one in twelve who do so already today. According to new research from Visa Europe, consumer adoption of mobile payments will grow faster than ever in the next five years, with six in ten Britons (60%) expected to use their mobile devices for payments at least once a week by 2020.
The UK mobile payments boom will probably see an upsurge in the weekly value spent using mobile devices, with the market growing to an estimated £1.2bn per week* by 2020. The tech-enabled shopper expects to spend £27 on mobile each week by 2020, up from the £17 they spend today. In fact, nearly 24% respondents think they could spend more than £50 a week using a mobile device by 2020, an estimate sure to raise eyebrows in the payments industry.
While apps and music are still the items are the most popular mobile purchase today, Visa has observed a growing number of consumers already buying higher value items, with electronics (23%) and clothes (22%) among their top-five most purchased m-commerce items.
The expected British embrace of digital payments is a sign of shoppers’ becoming less nervous with mobile payments as the option becomes more widely available, easier to use and better understood. With the increasing publicity around m-commerce options, digital wallets and contactless payments, 43% of shoppers say they may be interested in using a mobile wallet service and nearly half (47%) are interested in using their smartphone to make low-value contactless payments in a shop.
Nicholds added, “While we’re excited to see consumers saying they expect to triple their weekly spend using mobile payments over the next five years, we at Visa think those numbers could be rather conservative and that the actual adoption rate will be much higher. This is particularly true when you look at the growth in contactless usage, which saw European usage grow by 2x and spend grow by 3x over the last 12 months.
Contactless and online commerce enhancements have been key in paving the way for the next generation of mobile payment technology. The environmental conditions are already in place to meet the demands and expectations for digital payments. It’s no longer a question of ‘if’ consumers will embrace this new way to pay – it’s when – and for us the next 12 months are when mobile payments become mainstream.”
People who’re already using mobile devices to make transactions are also open to other mobile money services. The research highlights that these ‘mobile money’ users are five times more likely to be interested in paying friends through a smartphone app compared to non-users (48% vs. 9%). One in five would be open to social media payments too, compared with only one in twenty non-users.
Lack of knowledge – and worries, too
When looking at the main concerns about mobile payments, a third of respondents admitted that they simply didn’t know enough about it. As with other new technologies, this has resulted in apprehension about issues like privacy, fraud and security.
Jeremy Nicholds continued, “We’re witnessing a huge surge in interest from consumers in the UK for faster and more convenient payment methods as mobile and online commerce technologies continue to evolve at pace. This is why Visa Europe spends more than €200 million in on innovation including a number of secure payment technologies such as tokenisation to address security and convenience.
When it comes to money, concerns over control and security are understandable though a simple lack of knowledge is often an underlying cause, and consumers are quick to see the benefits of convenience. We’ve seen this with contactless card adoption – once people learn about the technology, see others using it and get used to paying with it, usage soars.”
Friction at the point of sale
Visa has invested a lot of money in mobile payments, with services like Apple’s ApplePay slowly beginning to get traction. But its the retailers themselves, who’ll have to invest heavily in new Point-of-Sale infrastructure, something they’re currently reluctant to do as consumer interest is still a long way away from critical mass and many moving to online buying anyway.
The problem with mobile payments and a point may industry commentators always make is that its solving a problem that simply doesn’t exist. Cards are easy to use, quick, familiar, have virtually 100% adoption everywhere, are cheap and free to replace. Who’ll buy you a new phone if it breaks or gets stolen?
You’re also far more likely to be mugged for that nice expensive smartphone than a piece of plastic.
But let’s not forget, suppliers like Visa and MasterCard get huge amounts of money from retailers and don’t want to lose out, should mobile payments take off.
And let’s not forget the threat posed by PayPal – but that’s a topic for another day!
About the ‘Mobile Money’ report
The mobile money research was conducted between 30 April and 20 May 2015 in six European countries: Finland, France, Germany, Poland, Spain and the UK. The total sample size was 12,015 consumers, approximately 2,000 respondents per country.
For more information, visit www.visaeurope.com and @VisaEuropeNews
[*] Figure calculated from ONS Population Estimates for UK, England and Wales, Scotland and Northern Ireland, Mid-2013 release and research figures from Visa Europe’s Mobile Money report.
Could London beat Silicon Valley as Crypto-currency’s centre of excellence?
Well, Visa thinks so. it hosted a gathering of crypto-currency start-ups and other interested parties to its Digital Catapult event in London recently. Visa’s not alone in thinking this. An expert from the London School of Economics (LSE), one of the most respected financial academic centres in the world believes it too. They even put a date on it – 2020.
Crypto-currency to explode?
Investment in crypto-currency start-ups in 2015 could even beat the dotcom frenzy of a few years ago. A technology called Blockchain has the potential to transform the future of payments in the banking sector – it may even transform way we cast and count our votes in the 2020 General Election. Financial observers have been waiting for the next big thing for a while now. Mobile payments has failed to catch the imagination of consumers, despite the presence of heavyweights like Google with Google Wallet and Apple with ApplePay, its not seeing the level of growth that the hype suggested. Maybe crypto-currency will.
Visa’s Europe Collab launch start-up innovation hubs in London and Israel are there to spot and engage with Europe’s top financial technology entrepreneurs, as the UK is now Europe’s fastest growing region for fintech with over 135,000 employees. Deal-volume, mostly out of London, has been growing at an annualized rate of around 74% since 2008, compared with 27% globally, and 13% in Silicon Valley, according to Accenture.
Speakers at Visa’s London event included leading monetary academic Garrick Hileman from the LSE, Hendrik Kleinsmiede of Visa Europe Collab one of Europe’s crypto-currency and Blockchain gurus in the financial services sector and Nicolas Cary, co-founder of Blockchain, one of the world’s best known BitCoin wallet company. According to Garrick Hileman of the LSE, “BitCoin is in a battle with more than 600 crypto-currencies. The governance structure in Europe and the US surrounding BitCoin may be an inhibitor to expansion for crypto-currencies whilst it may flourish in fertile territories like Sub Saharan Africa with over 50% of BitCoin mining being provided by China.”
UK leading the way
Sian Jones of COINsult feels “The UK is the only jurisdiction that is coming out with a holistic approach to digital currencies regulation.”
While according to Hendrik Kleinsmiede of Visa Europe Collab, “The level of investment in crypto-currencies is at an unprecedented high – to date over $667million. If you compare 2014 to 1995 at the beginning of the dotcom boom, there’s now more money being invested in crypto-currency than there was in dotcom.”
Are the Banks ready`/
Nick Cary of Blockchain noted “Banks are being exceedingly cautious but by summer there should be new policies in place to make it easier for BitCoin companies to operate in Europe and the US. The US is seeking a compliance pathway for Bitcoin start-ups, with New York setting the future as the model for regulation of Bitcoin “banks.”
Great news, but let’s not forget what became of the dotcom boom…
Lloyds Banking Group is the latest shady bank to receive a slap on the wrist from the FCA. In fact, the $45 Million fine meted out for gross financial mis-selling is the biggest to date. But it won’t change things one little bit. Why do I say this?
Ever heard of NFC, or ever used Google Wallet at the cash-out?
No, neither have most people. Using a phone to pay just doesn’t make sense. Its much slower than a card or cash, complicated to set up and just plain risky. But how about this?
Autumn 2011 has been a really interesting time for banking. I mean new banking, not that tired old high street of ours.
MovenBank’s appeared, Zopa’s broken more records, Wonga’s won more awards and a new social P2P player’s launching, CivilisedMoney.
It generated quite a lot of Twitter traffic with people on digital banking’s front-line, like banking innovators, Darren G and Aden Davies. And raised one key question.
Online or on high street – can a click ever replace a footstep?
You know, no matter how much you explain, some people never manage to get it. Take Wonga and the thorny question of APR, for example. Now I’m not going into compound interest’s mysteries and related technobabble. Let’s just look at the reality of how life is and take it from there.
Before the crash, we trusted banks and most of us funded our lifestyles with credit. Nowadays, most people are recovering from first-degree finger burns and avoid credit like gasoline on bonfire night.
But life still bites. You still get unexpected bills that threaten the next meal’s arrival. And if that happens – and you’re smart – you’ll appreciate Wonga…
If our high street merged, what would you take from each to form one super bank? I’ll leave you for a minute to have a think about that one.
For all banking’s “talent” and money, why so little to choose between each one? Why can’t we find a killer product or even one differentiator?
How can this be – in other sectors key differences exist. Why not in banking?
A writer who I follow was bemoaning the lack of change in banking the other day. Now the point was perfectly valid – until he took a pop at P2P lending. As I follow social banking – and as one of its great supporters, I had to disagree. But it raised an interesting question. How do we measure disruption?
The writer in question was James Gardner, who’s the general manager of Spigot, the leading business process software vendor in the innovation space.
In theory, he should know. But then he suggested that it could be “nearly 100%”. That sure had a disrupting effect on me – because that’s plain silly…
Business as usual for the global auditors. Its just like there was no banking crash. Pricewaterhouse Coopers – PwC – has just published its results.
Three things jump off the page to me. And each mind-numbing fact reminds me just how stupid banks and enterprises really are.
Firstly, PwC two main businesses turned over £900 Million and £650 Million each. The next is that UK Chairman Ian Powell will net a bonus of £3.7 Million.
And thirdly, they took on 1,200 graduates – average age 24 – to work with clients. Congratulations. That waste-of-space intern is now costing you £2,500 a day…
Ever stopped for a moment to consider exactly what is banking really all about? Could a lawn mower be the key to change?Not any old lawn mower. But Bosch lawn mowers – and how they came about. Because this is about re-invention at a very dark time. A time not unlike now.
About how a company faced with a collapsing market found the vision to change. Emerging stronger and able to cope with an even greater challenge to follow.
Once upon a time, we thought US financial policy was decided democratically. That concept was blown away like a dollar bill in Hurricane Katrina.
The US government in reality is no more than some crude Punch & Judy show, the strings being pulled by a financial Mafia run by Wall Street and its lobbyists. Everything neatly stage-managed by a company called Standard & Poor.
Standard & Poor was perceived as the US financial world’s steadying influence. The trusted hand deciding the efficacy of decisions taken on Wall Street.
The banking crash revealed a startling fallibility – but was that the real story?
They must have made us buy millions of wallets. I’m talking about plastic cards. They became an obsession – even something we collected. Colourful, pictorial, themed, silver, gold, platinum, even black. We had them all. Pushed by banks and card companies desperate to part us from whatever cash the Government hadn’t taxed us on, we let them cause our own credit crunch.
But finally, the tide is turning. Its not just consumers who are abandoning them. The banks can’t wait to get rid of their dried up cash-cow too.
NFC on phones is being pushed hard – the Next Big Thing for affluent spenders. Sure, it makes sense at first. A cool way to pay. But… Why not – we’ve this gadget-laden generation. Out to impress. They’ll love NFC. Well, maybe they won’t even think about it.
How can I say this. It flies in the face of everything the marketers are saying to us. But that’s the thing about marketers. They can sometimes miss the obvious…
Email. Its been around for over 40 years. And up there as our No 1 business tool. But things could be about to get very interesting in Inbox world.
As they say on Wall Street, what follows are some forward-looking statements. Therefore take this as my personal view, as the outcome is far from certain.
Three events have got me thinking about what might happen. Let’s set the scene. And taking the stage are RIM, Microsoft, VMWare, Zimbra and SalesForce…
Just a few months ago, I had high hopes for what Tesco bank might achieve. Even with Fred Goodwin fan-boy Benny Higgins in charge. But the recent prolonged outage for so many customers has been handled badly. And Benny Higgins has shown his old-school banking colours.
Given the opportunity to show strength and courage, he chose to make excuses. Instead of holding his hands up, he chose mitigation.
Every new venture has a wobble. He could have shone, but he blew his chance. Not only does Tesco have the wrong boss, it has the wrong staff. Here’s why…
OK, regular readers will know I’m not buying the hype around SmartPhone NFC. This is for a number of reasons and none of which are about it being new. I’ve talked about security, why quick isn’t a good reason, but that’s not everything. The real show-stopper to me is market reach. NFC just won’t fit the market.
Every other payment system before NFC reached its market cheaply and quickly. Now I’m going to show just how far NFC will fall short. Time to wake up…
Although owned by Royal Bank of Scotland, NatWest isn’t as hated as its parent. Strange, because really NatWest’s no better – some may even say its worse.
I’d like to talk a little about NatWest, but lets concentrate first on RBS as a brand. What can be done with a brand so damaged it’s lost the trust of its market?
I love it when I come across great ideas. Like game changing, eureka moments. But it frustrates me when solutions appear for problems that don’t exist. Take NFC payment systems, for example. A clever use of the tech in our pockets. But who said we had a problem at the cash-out?
We, the consumers don’t. The retailers like the short delay as they get to up-sell. Maybe its the payment system providers who have a problem. Like card fraud?
Here’s the crazy thing about NFC. The security is actually weaker. Much weaker. NFC presents a far higher risk profile than any other system…
Maybe the great bank holiday weather took many writers away for the weekend. But the number of “its all over for Cloud” rants were mercifully few.
So, what should be taken away from Amazon’s failure. What have we learnt? Well, its shown intelligent system design is as vital for Cloud as anywhere else. Along with how many “experts” can still talk through their back-ends…
Corporate security people and most security resellers wind me up. Always have. They constantly ignore the lessons life teaches us.
Life is constantly teaching us lessons. We deal with most things it throws at us. Security guys have a seizure when anything new appears.
Take Smartphones and the iPad for example. These guys are paid to know stuff. But they’re crap at doing their job because they can’t cope with the new.
The fall-out has still to settle from one of the greatest tragedies of recent times. While the furore and finger-pointing surrounding it will take a lot longer.
Given the prevailing circumstances, the technology behaved entirely predictively. The technology didn’t fail, we failed to manage it. Could we fail with NFC?
Quite a reaction last week when the news broke about the RSA SecureID breach. Someone may now know how to compromise two-factor tokens. Whilst every villain knows how to work around two-factor authentication anyway, the exposure of the underlying algorithm should have been viewed as inevitable. Before I’m castigated for saying this, let me explain…