Mobile payments are slowly but surely going mainstream. Mass adoption of smartphones and tablets is making the dream of fully digital wallets a reality and it is opening new possibilities for traditional banks, credit card companies and net-based payment services.
A report from BI Intelligence found that PayPal and Google Wallet lead the way, which is hardly surprising given their early lead, but more traditional credit card outfits are also looking for their place under the sun.
However, progress is still slow. As of late 2012, only 7.9 million US consumers adopted NFC based systems like Google Wallet or apps that use alternative methods such as QR codes to generate a payment. However, in-store mobile payments totaled $640 million in the US last year, up from $170 million in 2011. The figure does not include swipes on mobile credit card readers like Square and PayPal Here.
Square’s mobile payments volume rose to $10 billion in 2012, up from $2 billion in 2011. PayPal processed about $14 billion in mobile payments last year and it hopes to build a merchant-powered network based on its service as a payment and money transform platform. PayPal is already offering in-store mobile payments at thousands of traditional stores and this year it is planning to expand the program with Discover.
The volume of mobile payments is expected to reach $1 trillion by 2015, as more and more brick and mortar businesses embrace e-commerce.