THIS is the year of mobile payments!

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Every year since 2010 it has been predicted that ‘this year’ will be the year in which mobile payments will truly take off but the reality of mobile payments never really materialised. However, we have finally reached a point where we can say in earnest that 2016 WILL be the year of mobile payments! So what makes this year any different? For the first time, demand and infrastructure are maturing and coming together to make mobile payments easy, secure and intuitive in a way that they never have been before. The implications of which will be huge for the mobile travel industry as a whole.

Below are 5 reasons why mobile payments will dominate in 2016.

Huge growth in mobile payments is on the horizon

Despite still being a very fragmented mobile payment landscape, mPayments in the US totalled $8.7 billion last year — a phenomenal figure for an industry that is still very much in its early stages of development. However, if you think this amount is impressive, analysts predict that the figure will triple to $27.5 billion[1] in 2016. These predictions are based on a growing user base, broader merchant acceptance and the greater frequency of consumers using mobile to make point-of-sale payments for medium and high priced products such as travel.

Simplifying booking is the way forward in addressing booking abandonment

Research into online travel booking shows that a staggering 80% of visitors will leave an online site without completing a booking and reservation[2] and while booking abandonment rates on mobile are much lower at 38%[3], getting the mobile booking experience right to ensure smoother and faster booking processes for mobile travellers continues to be a priority for all airlines and travel companies in 2016. For today’s travellers, five or more mobile screens to book a flight or hotel feels positively slow and clunky. Travel brands are already starting to recognise this and by the end of 2016 they will reduce the number of steps needed to complete a booking or purchase by introducing multiple new mobile payment options. This will revolutionise the in-app experience, bring greater ease and speed to the mobile booking process and, in turn, drive further travel bookings and ancillary purchases via mobile for airlines, travel companies, and hotels.

Security and fraud concerns are being abated

Security is an essential element to any payment transaction and over the past year a huge emphasis has been placed on improving security around mPayments. New measures such as biometric authentication, tokenisation, two-factor authentication, voice recognition, keystroke detection, finger vein scanners and pulse recognition, which will scale in 2016, will offer much greater reassurance and convenience to end-users.

Digital Wallet: the ‘must have’ of 2016

Apple, Google, Samsung, PayPal, Walmart … the list of major players trying to move usage of ‘physical’ wallets to their version of a ‘digital wallet’ will only grow this year. In fact, the number of mobile wallets using contactless technology is expected to reach 200 million by the end of 2016, representing growth of more than 100% from the end of 2014[4]. In addition to that, loyalty programmes will become an integral part of the ‘digital wallet’ mix — as major players in mobile payments are beginning to partner with businesses to make those digital too. For example, Android Pay is partnering with Coca-Cola to award users points towards future purchases when they tap their smartphone to buy a Coke at a vending machine[5] and Apple Pay announced similar loyalty programme partnerships with retailers such as C Penney, Kohls, Walgreens, and Dunkin’ Donuts. As more airlines and travel companies adopt digital wallets and the significance of mobile payments in travel increases, it is only a matter of time before we see greater integration of loyalty within the mobile strategies of airlines and travel companies.

Mobile Payment: the last friction point in seamless mobile travel

Finally, and perhaps the most important one of all, payment is the last major friction point left in mobile travel bookings. 2015 saw every other drop off point nearly erased:

  • Booking friction: that was addressed by saved/recent/favourite searches & abandoned basket pushes;
  • Passenger and addresses details friction: addressed by saved profiles and loyalty accounts with ‘pick these names’ solved that too;
  • Check-in friction: that was addressed also with passport scanning.
  • In online travel bookings, research shows that at least 7 per cent of travellers abandon bookings due to limited payment options[6] and we expect the same figures to be reflected on mobile. In 2016, the most successful brands in travel will enable their customers to pay the way they want to pay, rather than making that choice for them.

In 2016, global mobile travel bookings are predicted to rise dramatically by 22%[7] and in the US mobile will represent more than half of all online travel bookings[8] highlighting huge opportunities for airlines and travel companies to drive mobile commerce to new levels this year. The increasing sophistication of mobile payments is a key stimulus for travel companies to tap into this opportunity by eradicating friction from the mobile booking process to provide fast, secure and seamless mobile transactions that will enrich the booking experience on mobile and reduce booking abandonment to drive new mobile revenues.

To find out more about key 2016 trends in mobile payments or to have a wider discussion about your mobile strategy please click here to arrange a meeting with one of our experts.

[1] eMarketer, November 2015, http://www.emarketer.com/Article/US-Proximity-Mobile-Payment-Transactions-Reach-871-Billion-2015/1013278

[2] The Drum & Sales Cycle, December 2015, http://www.thedrum.com/opinion/2015/12/17/how-virgin-atlantic-reduced-booking-abandonment-and-boosted-online-sales-over-5

[3] Jumio and Tnooz, September 2015, http://www.tnooz.com/article/tackling-abandoned-mobile-bookings-travel/

[4] Juniper Research, September 2015, http://www.juniperresearch.com/press/press-releases/contactless-mobile-wallets-to-reach-200mn-by-2016

[5] Forbes, September 2015, http://www.forbes.com/sites/cit/2015/09/14/4-reasons-mobile-payments-will-explode-in-2016/

[6] The Drum & Sales Cycle, December 2015, http://www.thedrum.com/opinion/2015/12/17/how-virgin-atlantic-reduced-booking-abandonment-and-boosted-online-sales-over-5

[7] Euromonitor November 2015, The State of Mobile Booking 2016 (Skift Report)

[8] Skift, November 2015, http://skift.com/2015/11/20/mobile-will-represent-more-than-half-of-all-online-travel-bookings-in-2016/

Image source: http://images.dailytech.com/nimage/Apple_Pay_Samsung_Pay_Google_Wallet_Collection.jpg

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