Mobile Bill Payments on the Path of Accelerated Growth

Last week, I delivered the Keynote Address entitled, Trends in the Digital Payment Transformation, at the PayCommerce Client Conference held at the Hyatt Hotel in midtown Manhattan. The audience consisted of a cross section of payment professionals from various industries including, banking, finance, technology and healthcare. In my introduction, I held up a piece of computer hardware that is over twenty years old…my first modem. Several decades ago, this hardware provided the ability for people to surf the Internet and visit sites that previously they could only imagine. Armed with bank software a computer and modem, consumers could pay their bills from the comfort of their home and now interact with their bank in new ways. In time, bank teller lines began to decrease in most areas. However, today payment disruption has migrated to multiple channels, mainly mobile.

The day I was scheduled to deliver the Keynote Address, I mistakenly left my mobile phone at home. Throughout the day I felt that I temporarily “lost” something of great value, I likened it to leaving my wallet or some important papers for a meeting at home. The concern of leaving my phone at home was not about missing a call or an important email, but the mobile phone represents much more. The mobile phone provides greater access to information and more freedom. For example, some common uses of the mobile phone is a wallet, a payment device, a digital newspaper, a communication tool, a calorie counter, an exercise walker, and more. Throughout the Conference, I observed some of the attendees checking emails, texting and surfing and I felt paralyzed being left out of these activities. I am convinced that our lives are governed by technology!

According to Newsweek Magazine-November 2015, “In 2014, customers in U.S. retail stores made an estimated $5.5 billion in purchases using a mobile device. That’s only about 0.1% of the nation’s sales. In 2019, however, shoppers are expected to spend an estimated $819 billion using a mobile device, or about 15% of sales, according to researchers at BI Intelligence. If correct, mobile payments may grow at a five-year compound annual growth rate of 172%, creating intense competition to provide digital wallets”.

A number of years ago, there was not much focus on paying bills via a mobile phone but recently this has changed. The introduction of Apple Pay last year raised the profile of this potential transition in the way people pay for goods and services. Less than 72 hours after its debut, 1 million credit cards had been used on the service. Google recently unveiled a mobile payment system called Android Pay that will compete with Apple and Samsung Pay, and PayPal recently announced the acquisition of a mobile-wallet maker.

A number of Bill Payment Service Providers (BSPs) provide multiple channels for bill payment to include, IVR, web and mobile. The mobile channel has been slow for adoption. In many Bill Payment RFPs, there are often questions about the mobile payment channel but for many companies; the customer adoption rate is less than 1%. However, there is more momentum for consumers paying bills via with their phone. Consumers are comfortable using the mobile channel to pay their bills. As technology continues to deliver a robust set of options, consumers will use their phone to pay their bills, and surf the Internet for great deals, plan vacations and play games.

The movement toward mobile payments languished for some time, but there now seems to be growing acceptance among businesses and consumers. Retailers from Wal-Mart to Whole Foods see mobile payments as the future, providing opportunity for numerous companies that facilitate the transactions.

So when looking toward the future, I initially see more vendors in the mobile payment sector over the next two to three years and then a constriction based on vendor consolidation. More vendors will offer deals for consumers to make payments from their phone and companies will provide more apps and sponsorships to incent consumers to pay via this channel.

So what does the data and research tell us? The mobile phone is fast growing as the channel of choice to make a purchase. Make sure to check twice before you leave the house, and never leave home without it!.

Wayne Brown focuses as the bridge between FinTech and financial institutions, working with FinTech companies and banks to find and create mutually profitable opportunities. Our varied market segments enable us to identify synergies and opportunities to stimulate growth as we partner with our clients to build their business. For more information please contact me at waynebrown@waynebrown.nyc.