There has never been a bigger choice of ways to pay for everything from a coffee to a brand new car, with eWallets and mobile apps now vying with more established methods of making purchases.
But the diversity of today’s payments landscape should not hide one big trend that will make 2016 an especially momentous year in the history of money. As Worldpay revealed in its latest Global Payment Report, alternative payment methods (APMs) reached a historic milestone this year when they overtook card payments to make up 51 per cent of the market.
The mCommerce boom has been instrumental in driving this shift. The rise in mobile purchases, new payment applications and popular NFC technologies has made the smartphone much more than a device for online shopping: it’s becoming our principle platform for managing money.
We are officially entering a “third generation” of payments on the coattails of alternative payment methods for mobile. The first age of digital payments began with the eCommerce boom in the early 2000s when companies like PayPal and AliPay introduced eWallets to the mainstream. The second phase coincided with the rise of the smartphone at the beginning of the decade, and we’ve since seen a proliferation of new mobile apps that quickly raised the bar for convenience in payments.
Now that APMs have won the majority of the market and no sign that their growth will slow, it’s fair to say the smartphone has helped bring eCommerce out of its growing pains. Technologies such as eWallets and a range of mobile payment apps from both banks and merchants are no longer foreign to most consumers, and are in fact becoming an unremarkable part of their lives.
Our latest Global Payments Report also predicted that eWallets would overtake credit cards in the global eCommerce market by 2019, accounting for 27 per cent of global turnover compared with credit cards’ current 24 per cent. The market for APMs will continue to grow as PC sales continue to decline and the smartphone solidifies their position as peoples’ go-to connected device, and will continue to eat into the market share of traditional payment methods like debit cards, bank transfers and, of course, cash.
It’s worth noting the alternative payments market is developing at breakneck speed, however, and the complexity of the current payments landscape will inevitably lead to some degree of confusion and fatigue among consumers with too many options to choose from. This will be a defining characteristic of the “third age” of payments; in the next few years we’ll see consolidation in the payment app market as consumers hone in on their preferred platforms and ultimately define the winners and losers in the market.