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#Technology

Mobile wallets market growing at phenomenal rate

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A new analysis by Juniper Research has revealed that the number of mobile wallets relying on contactless technology is growing at a phenomenal rate with as estimated 200 million wallets expected to be active by end of 2016.

The market research company also found that while historic growth of mobile wallet usage was driven by P2P (Person to Person) services for the unbanked in developing markets, the launch of Apple Pay has prompted a hive of activity in the contactless arena.

The report says that the launch of Apple Pay has more or less triggered a wave of increased awareness because of which more and more people are joining the mobile wallets bandwagon and because of the increased awareness among consumers, more and more competitors are also spawning.

Some of the latest entrants into the mobile wallets market are Samsung Pay and the forthcoming Android Pay. These companies already have a strong footing because of their increased market share and with increased awareness, they won’t have to do much into creating that buzz.

The report also found that numerous banks are also working independently with Visa or MasterCard to implement own-brand contactless wallets using a cloud-based secure element and this will usher in a new level of mobile wallet growth.

However, all is not well in the wallets market because MCX (Merchant Customer Exchange) Consortium had postponed the launch of its own contactless service, with several retailer partners now abandoning their ‘closed shop’ stance towards Apple Pay. Furthermore, the Consortium has not agreed terms with any leading card holders, citing the high transaction fees as a stumbling block.

According to research author Dr Windsor Holden: ‘By the time MCX launches, US consumers will have a choice of perhaps half a dozen other mobile wallet solutions, not to mention the fact that an increasing number will also have contactless payment cards. In addition, the reliance on store brand payment cards could ultimately be a fatal flaw for the service.’

Some of the other key findings of the report are:

  • Mobile operators are not faring well as far as mobile wallet offerings are concerned; and
  • Developing markets have shown a significant upscaling of wallet usage for savings and loan disbursements, while more than 100 million are now in use for micro-insurance.

You can download the report Mobile Wallets: Contactless & Remote Payments 2015-2020 here.