PayPal predicts mobiles to replace wallets by 2016

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PayPal predicts mobiles to replace wallets by 2016

Payments via mobile phones will replace physical wallets in 2016, according to a report by Forrester and PayPal.

But ABI Research predicted the NFC-based Google Wallet would drive faster adoption in this market by the end of 2012, with global adoption by 2014.

Although the outlooks differ in timescale, the analysts agreed mobile network operator (MNO) collaboration would be vital to support rapid consumer adoption of touch-and-pay technology.

PayPal has been talking up mobile payments growth among its customer base. PizzaExpress recently became the first UK retailer to integrate PayPal into a mobile app for customers to pay for their meal with their smartphone at their table. But it has yet to reveal its NFC play.

“The lines between the online world and High Street will soon disappear altogether,” according to Carl Scheible, PayPal UK managing director. “Children born today will become the UK’s first ‘cashless generation’. It will be completely natural for them to pay by mobile.”

The report, Money: The Digital Tipping Point, said that 2016 will be the year when UK shoppers will be able to use their mobile phones to pay for things on the High Street with digital money rather than cash, cheques or cards.

It said the findings were based on Forrester Consulting interviews with 10 senior executives from major UK retailers and other businesses.

In the world not according to PayPal, US analyst ABI Research was more generous in its NFC adoption rates forecast.

Factoring in the expansion of Google Wallet, the NFC payment system launched by Google on Android-based handsets in the US this summer, plus the hotly tipped entry of Apple, ABI said the numbers of NFC-based mobile wallet users would grow to 594 million in 2016.

“By the end of 2012, Google will prove that Google Wallet is a hit with consumers. By 2014, we will see Google Wallets supported alongside competing MNO offerings globally,” said Mark Beccue, ABI Research mobile commerce and NFC senior analyst.

He added: “Apple will launch a mobile wallet product in 2012.” This, he explained, would mean Apple’s MNO partners would likely have to allow it to offer its own mobile wallet to consumers who have iPhones, regardless of whether or not the MNO has a competing mobile wallet product.

Beccue predicted MNOs, like Orange with its UK Barclaycard partnership, would provide 75 per cent of all mobile wallets in 2012, but that their share would shrink to 63 per cent in 2016.

Over-the-top mobile wallet providers like banks, merchants and payment providers including the likes of PayPal would, the analyst added, have a difficult time establishing critical mass for their offerings, although they might find niche success.

This article originally appeared at

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