challenges hamper mobile paymentsConsidering our recent report on data showing that two in three consumers abort smartphone or tablet purchases due to checkout snags, and that consumers abandon mobile shopping carts more than 90 percent of the time, Yahoo Small Business readers won’t be surprised to hear that global technology analyst Ovum predicts low consumer uptake and usage of m-payment and digital wallet services in 2014.
Based on its 2013 Consumer Insights Survey of 15,123 consumers across 15 countries Ovum predicts “on-going challenges around the business model for digital wallet services” and says “consumers will lean most towards services associated with financial brands.” Specifically, 43 percent of survey respondents consider banks the most trusted m-payments service provider, followed by credit card companies (13 percent), online payment providers (9 percent) and then mobile operators (6 percent).
According to Eden Zoller, principal analyst with Ovum’s Consumer Practice, and author of its 2014 Trends to Watch: Mobile Payments and Mobile Advertising report, “overall revenue growth for mobile payments in 2014 will be slow and steady rather than spectacular, at least in mature markets.”
Zoller predicts that, because the recent explosion in digital wallet launches is “not sustainable,” there will be consolidation in the coming year. And, instead of adopting multiple digital wallets, consumers “will focus their loyalty and spending with one or possibly two services,” she says, adding that, therefore, the “best positioned companies will be those associated with the financial brands that consumers trust most and are familiar with.”
Location-based advertising will be a priority focus in 2014, but many service providers underestimate the challenges involved, according to Zoller. She says location-based advertising is rightly seen as promising because of the tangible benefits to retailers and consumers, but it will become even more complex as techniques and data sources proliferate. "At the same time," she reports, "push-based location advertising has the potential to be very intrusive if not accurately targeted, and the need for precise targeting raises sensitive issues relating to data privacy."
Ovum’s analysis also indicates that, although the mobile point-of-sale market is here to stay, consolidation will begin in earnest this year. So-called “mPOS” providers will need to address larger enterprises and compete with traditional POS vendors in order to achieve scale, Zoller predicts.
As for tablet-based mobile commerce, Zoller predicts a sharp increase. “Consumer adoption of tablets is growing quickly, and their large screen size and enhanced graphics mean that they are better suited than smartphones to displaying and appreciating visual merchandise,” she reports. Ovum also predicts growing spending on tablet advertising: 75 percent of survey respondents said they expect to use their tablets more in 2014 and 2015.