Global spend via mobile wallets is expected to rise by nearly 32% this year to $1.35 trillion.
This is according to a recent study by Juniper Research, which notes this spend is currently concentrated in the Far East and China, due primarily to the success of Alipay and WeChat. However, the report expects that moves by PayPal and Apple to offer wallets that can be used both instore and online means that wallets will increasingly become the default payment mechanism in other markets.
Also, research firm Technavio predicts global mobile wallet market will grow steadily during the next four years and post an impressive compound annual rate growth of more than 35% by 2021.
The increasing usage of mobile wallets for shopping will intensify the market's competitive environment, it adds. Furthermore, analysts predict that the international players will grow inorganically during the predicted period by acquiring small players, says Technavio.
To survive the competition and establish their presence in the market, mobile payment companies need to distinguish their product and service offerings through clear and unique value propositions, it notes. Juniper sees PayPal's decision to introduce a host card emulation (HCE) near field communication (NFC) solution to enable point of sale (POS) payments as a key disruptive moment in the wallet wars. According to the research, this - allied to the rapidly increasing success of its social payments subsidiary Venmo - places PayPal in pole position to capitalise on the increased demand for mobile wallets.
Additionally, the research points out the implementation of the payment services directive legislation should spur further competition within the European wallet space, with existing players poised to introduce additional services to complement their payment offerings.
However, it warned that outside emerging markets, remaining mobile network operator wallet ventures were unlikely to gain traction. According to research author Windsor Holden, "Network operators remain wedded to offline payments based on an NFC SIM card, at a time when more agile competitors are deploying integrated HCE wallets that also enable online usage."
On the other hand, Research and Markets notes the growth of the mobile wallet market depends on the demand and availability of NFC POS terminals. As POS terminals for NFC payments are expensive, retailers will likely upgrade their infrastructure only if there is widespread adoption of contactless payments among consumers, it says.
Though companies such as Samsung Electronics, Orange, AT&T, Starbucks, and Gemalto are supporting contactless payments, retailers have not yet upgraded their POS terminals as it expensive, add Research and Markets. This inter-dependence of retailers and technology providers is slowing down the growth of the global mobile wallet market, it notes.
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