Mobile payments, which encompass mobile wallets and mobile money transfers, are regulated transactions that take place through mobile devices. Alipay and WeChat Pay are very strong in China but are also faring well elsewhere through partnerships. All new digital banks, particularly Square, Monzo, and Revolut, as well as African systems, such as M-Pesa and Orange Money, are winners and set to do even better as these are growth markets.

Listed below are the top mobile payments predictions, as identified by GlobalData.

The mobile payments market has a lot of space to grow in 2020 but nonetheless we expect more consolidation. In the US, the market is already highly crowded but usage remains low. In Western markets, the underlying systems are already interoperable at their core due to the ubiquity of card acceptance. However, merchants need to strike individual deals with wallets to accept them and merchant resources can only stretch to so many of these deals.

This puts pressure on processors to offer merchants the ability to accept everything through a single deal – one driver of the consolidation trend seen in the processing market. They also need to be able to manage the numerous regulatory regimes across the world such as data protection, antifraud measures, and regulations or licensing regarding how money is handled and stored. In order to achieve that, they need global reach, local expertise, and massive economies of scale.

Mobile payments have developed tied to specific domestic markets. Alipay and WeChat dominate the whole market domestically for partnerships but outside China, they exist through partnerships for acceptance with processors and card schemes.

The examples of SGQR, VIA in Southeast Asia, and the European Mobile Payment Systems Association show where the mobile payments market may ultimately develop. The enduring nature of payment cards in the face of innovation shows the importance of payment tool interoperability at a global level.

For mobile payments to challenge card payments globally, a body equivalent to Visa or Mastercard for mobile wallets is required. Both of these schemes have signed multiple regional mobile payment tools to their brands, and in time could become genuine alternatives to the card schemes in their regions.

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By GlobalData

Emerging markets have embraced mobile payments

Mobile payments have emerged as a viable alternative to cash and cards in these countries, and governments, banks, payment service providers, telcos, and e-commerce merchants are working to boost mobile-based payments. The introduction of mobile POS terminals and QR-based payment acceptance has further accentuated the shift.

In industrial nations, the existing infrastructure slows adoption. Cards are ‘sticky’ and as a result, mobile payments in the West find the greatest success with younger consumers. The gradual generational shift will thus be a major force in the adoption of mobile payments in the West in 2020.

In the strong mobile payment markets, there is much less resistance to mobile payments among older consumers. The barrier to mobile adoption in the West is not so much that older consumers are less tech-savvy but rather that they are more likely to stay with the tried-and true payment cards.

This is an edited extract from the Banking & Payments Predictions 2020 – Thematic Research report produced by GlobalData Thematic Research.