The digital wallet is not a new concept. Apple and its main competitors have, for a long time, been on a mission to turn people’s mobile phones into payment devices linked directly to their bank accounts.
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But perhaps the ease of use of contactless debit and credit cards has held people back from going truly digital.
This could be changing as the latest figures from payments company Worldpay reveal that 126 million payments, worth almost £1bn, were made using near-field communications (NFC) technology on mobile phones in UK retail stores last year.
This amounted to a 328% increase on 2016, according to Worldpay, and with a third of consumers now using the payment functions on their mobile phones, further rapid growth in mobile phone payments is expected.
In fact, the second half of 2017 saw the number of payments accelerate significantly. A Worldpay report at the halfway mark of 2017 put in-store mobile phone spend at £370m. A further £600m was added by the end of the year, taking the total to £975m.
At the time, James Frost, UK chief marketing officer at Worldpay, said contactless mobile spending had shaken off the novelty tag, but that there was still some way to go before phones would replace cards.
Accounting for 59% of all in-store mobile transactions, the supermarket sector has been an important driver in the uptake of digital wallets such as Apple Pay, Google Pay and Samsung Pay, as time-poor shoppers grab groceries on the go. Pubs, bars and restaurants make up a further 12.5% of the total spend.
But according to Worldpay’s analysis, shoppers are adding higher-value purchases to the low-cost items that have traditionally been paid for using a mobile phone.
In the second half of 2017, the average spend per transaction increased by 11% after retailers began accepting “limitless” Apple Pay transactions in May.
Following the latest survey results, Frost said: “Digital wallets are growing in popularity every day, but what’s interesting is the shift in the way people are shopping with their smartphone. No longer just restricted to light bites and post-work pints, mobile contactless payments are becoming increasingly popular for higher-end purchases too, as manufacturers integrate more sophisticated security features into handset designs.”
Separately, research from ACI Worldwide and Aite in September 2017 found consumers in Europe were beginning to warm to making payments using their mobile phones.
The survey of more than 6,000 consumers in 20 countries found that the developed countries of Europe, as well as the US, were beginning to catch up on the developing regions, such as Asia and Latin America, in terms of the use of smartphone-based payments.