The European Payments Landscape – Who’s Using Mobile Payments?
Forrester Research anticipates that European consumer mobile payments, which include remote purchases using an app (with collection in-store), will increase to $165 billion in 2021.
At the end of 2015, mobile payments across the seven largest European economies (France, Germany, Italy, the Netherlands, Spain, Sweden and the UK) were $52 billion. Forrester expects a threefold increase in the next few years. Visa Europe also conducted an even broader study in 2016, with results pointing to a similar surge in mobile payments across Europe.
Mobile Payments: Popular in Europe
Surveying over 34,800 customer’s in 19 European countries, Visa Europe found that the percentage of people regularly using smartphones for payments increased to 54% from 18% in one year. UK consumers were some of the most prolific mobile payments users, with 74% of those surveyed making payments using Apple, Android, Samsung Pay or another mobile payments service.
Pretty impressive, considering the relatively short time mobile payments have been available in Europe. Whist there are high adoption rates in the UK, British consumer are not the most active mobile payments users. Ten other countries, including Romania (79%), Sweden (86%) and Denmark (89%) are more likely to use their phone when making a purchase.
Turkey, straddling the Middle East and Europe, are the most active mobile payments users, with 91% of people making purchases with a smartphone instead of credit or debit cards, or cash.
Visa Europe also notes that consumers – every age group and demographic – are more comfortable than ever using mobile banking apps and purchasing high-value items, such as holidays, electronics, plane and train tickets, and white goods.
We are currently seeing is the acceleration of the network effect. Once enough people – early adopters, usually younger people – start using a new technology (e.g. an app, social network, payment method), others start using it too as trust is established and positive reviews spread through word of mouth and online. Younger generations show their parents; they share new services and apps with friends and family. User behaviours change and adapt. We can see the outcome of these on Facebook; formerly dominated by young people now the fastest growing demographic is the over 65s, and the younger generations (especially teenagers) are declining.
The same thing is happening to Apple, Android, Samsung and other mobile payment service; although the younger demographics continue to be driving force behind this. Almost half of Millennials have used a mobile wallet, compared to 25% of adults aged 35 and above. Hence, the reduction of high street banking as more people switch to mobile banking. It will take more time to encourage higher adoption and usage rates – mobile payments may never replace credit or debit cards, but we can expect more people to start using a mobile device as an extension to their wallet and make more payments that way instead of traditional methods.
For merchants in Europe, especially in those countries with high mobile payment adoption rates, optimising the payment journey is crucial. Not just for retailers either, as we have seen consumers are using mobile payments for a wide range of purchases such as for travel. We expect that as the trend continues, consumers will expect to be able to use mobile payments for an even greater range of goods and services.