26 Sep 2019
Posted in Business Fundamentals
Mobile payment technology next big thing in retail, says GlobalData
Latest advances in mobile Internet technologies and growth in the adoption of smartphones has brought about a shift in the way people make payments and retailers are also taking a note of it. Against this backdrop, mobile payment technology is set to be the next big thing in retail sector, according to GlobalData, a leading data and analytics company.
According to GlobalData’s Company Filing Analytics platform, which leverages machine learning (ML) and natural language processing (NLP) techniques to identify and track major themes impacting various sectors, mobile payment remained the top theme/topic of discussion for the retail sector in 2018.
Aurojyoti Bose, Lead Analyst at GlobalData, says: “The trend is likely to continue driven by growing customer expectations for convenient payment systems fueling investments in digital initiatives by retailing companies.”
According to the platform, the number of retail companies (from a universe of 222) discussing mobile payments theme increased from 188 in 2016 to 197 in 2018. The total mentions of the term by these companies grew from 15,480 to 16,635 during the same period.
Convenience is the major driving factor for the growing popularity of mobile payments technology and majority of retailers have started viewing it as an important theme.
Payment through mobile devices is the fastest growing mode of payment in the retail sector. According to GlobalData, m-commerce is projected to grow at a compound annual growth rate (CAGR) of 20% over the period 2017–2022.
Bose adds: “With retailers constantly looking for innovation that offers better experience to shoppers both in-store and online, mobile payment is a key tool for further improving this experience. As a result, retailers are increasingly shifting their business focus to make mobile a priority.”
While this trend has created new opportunities for pure tech players, competition is intensifying with the underlying potential prompting retailers also to create own payment apps or adding mobile payment functionality to their existing wallet.
Starbucks is a notable early adopter of mobile payment technology. In terms of usage, Starbucks app is now the leading mobile payment app in the US, surpassing payment apps from tech giants such as Apple, Google and Samsung.
In the US alone, Starbucks had amassed over 23 million users who had made an in-store mobile payment using the app during the last six months of 2018.
While other leading retailers such as Alibaba, Amazon, Walmart, Target and CVS already have their own mobile payment apps/digital wallets, other retailers are also joining the bandwagon.
In June 2019, American supermarket chain Publix announced plans to launch a new mobile payment system. Earlier in February 2019, American retailer Kroger launched its mobile payment platform Kroger Pay.
Bose concludes: “With non-cash payments likely to become mostly the norm, the retail sector’s interest in mobile payment technology is unlikely to abate soon. And it will be interesting to see how mobile payments reshape future retail transactions.”