Mobile Payments Space to Hit $95 Billion by 2018

The mobile payments industry today, though growing, is a mere shadow of what it will become in the next few years, according to a new study from Juniper Research. As mobile and wearable contactless payments make their way to transit systems, retailers and many other areas, Juniper expects massive growth, allowing the market to reach $95 billion by 2018, up from just shy of $35 billion last year.

This new research report, entitled “Contactless Payments: NFC Handsets, Wearables & Payment Cards 2016-2020,” states that the emergence of a rand of connected wearables is what has NFC stakeholders interested. Despite the fact that smartwatches have yet to really find their niche as compared to more popular fitness devices, Juniper expects that devices like watches and wristbands will lead the way in contactless payment developments. However, the market still has some time before it reaches its peak popularity.

Meanwhile, despite the possibilities that smartwatches may open up in contactless payments, the research is quick to point out that while nearly nine million Apple Watches shipped by the end of 2015, those numbers were a fraction of shipments of NFC-capable iPhones. In other words, wearables as a whole aren’t expected to account for more than two percent of non-card contactless payments by value in 2018.

The use of Apple as an example is no coincidence, of course. As with the mobile space, Apple is already leading the way in the NFC ecosystem, with several vendors following in the company’s footsteps and embedding secure elements within the smartphone. This approach may be what has weakened the contactless prospects for mobile network operators as it effectively cuts them out of the value chain.

“Most operator-led pilots and commercial ventures have now closed down. Apple’s entry into NFC gave the industry a much needed boost, and could well be seen as the tipping point for the technology, but at the same time it sounded the death knell for the mobile operator projects,” said research co-author Nitin Bhas.

Other vendors competing in the space include Samsung, the only other OEM to launch an own-brand contactless payment service to date, along with Chinese device manufacturers Xiaomi, ZTE and Lenovo.