In a context of containment, these weeks will witness the impossibility for the consumer to move to the store. However, the decision-making power has left the door open to the possibility of delivering, or even collecting in-store purchases made online. It is therefore likely that mobile payment is at the heart of the behavior of mobile users. Will it last?

For less than two decades, NFC (understanding Near Field Communication, or radio waves) technology has revolutionized the way we track trade. In the consumer environment, this has led to the possibility of paying via mobile using a chip directly implanted in the smartphone. The idea is attractive: 62% of London people have already used a digital wallet or a mobile payment service. London ranks second in the European ranking of countries showing growth in mobile payments.

What opportunity does this means of payment constitute for our brands? By now collecting almost 9% of payments among the total purchases in the world, mobile payment is today a staple of commerce (whether online or in physical).

Guest article
This article was written by Captain Wallet, a solution for deploying marketing campaigns on Apple Wallet and Google Pay.

mobile payment

A late London market

Despite the success of contactless payment, mobile payment has not won over London mobile users. According to Statista, in 2019, the penetration rate of mobile payment reached only 2.2% against 6.6% for the United Kingdom and 7.3% for Spain. This solution is most successful in Asia, with figures exceeding 15%: 15.9% for Indonesia, 29.5% for India and an impressive 35.2% for China.

London has nothing to be ashamed of on other comparison items, with an average annual basket per user of € 1,055.4. With this variable, it is thus placed in 4th place in the top 10 drawn up by Statista behind the United States (€ 2,676.6), the United Kingdom (€ 2,203.6) and then Israel (€ 1,330.4 ). Be careful, however, to take these figures with tweezers, since the cost of living is obviously not the same between western and eastern countries.

graphical mobile payment

The delayed success of the tool between these territories can also be explained by the early use of the WeChat messaging application (developed by the giant Tencent), allowing its users to pay directly from the application. However in its report taking stock of the year 2019, Tencent identifies more than 1 billion active users (1,165 million to be precise), representing a growth of 6.1% compared to the financial year 2018. L AliPay tool, developed by competitor AliBaba and powered by the same features, is very slightly below since it has around 1 billion active users per month in 2019.

Contactless payment, however, appealed to the London. The meteoric increase in the number of payments made by putting your bank card on a terminal increased from 2 billion in 2018 to 3 billion 500 million in 2019 according to figures from the European Central Bank. An Ifop survey published in December 2019 reveals that 73% of London people used contactless payment in the same year. The same study shows that it is not a question of generation, but that the problem is really linked to categories of population and income levels. The biggest users of contactless are CSP + (87% of them) as well as students, managers and large families.

In London, confinement is putting mobile payment back in the race for contactless payment!

With the imposed confinement framework, the trend seems to be turning in favor of mobile payment.

The Afterbanking Observatory for New Banking Uses, set up by Orange as part of its Orange Bank service, found that the unit amounts of bank card payments saw an increase of almost 30%. Contactless payment, considered a barrier gesture against the transmission of the Covid-19 virus, provides security that has increased the shopping basket paid by mobile payment by 60%. In response to this, Orange Bank increased the ceiling for mobile payments from € 1,000 to € 1,500.

The electronic wallet (or “mobile wallet” in English) is thus becoming an increasingly popular solution for consumers, for health reasons and so as not to be limited to a ceiling. In addition, the list of banks that have opened the possibility for its users to dematerialize their bank card is increasing, the most famous laggards being only 3 (BforBank, CIC and ING).

Because indeed the major advantage of mobile payment is that it is not limited, like contactless, to a ceiling defined by London banks. In addition, they have decided to increase the payment ceiling to € 50 from May 11, the official date (for now!) Of the end of total confinement. This change had already been under consideration for several months, but the situation accelerated the implementation process.

Mobile payments have proven to be an ideal solution for remote payments. This, mainly due to the danger in which were the so-called food traders who are small structures, not equipped with means of remote payment and therefore greatly threatened at the start of confinement. Paylib, a mobile payment solution, then made its payment service “Paylib with friends” available free of charge for the time of confinement. Its competitor Lyfpay did the same and also extended this possibility to healthcare professionals, the charitable world and food distributors, large and small! Auchan, Carrefour, Casino, Leader Price, Franprix and Bio c’Bon continued to use Lyfpay as a mobile payment solution. The app even saw a spike in activity since containment, said Frédéric Leclef (Deputy CEO of Lyfpay).

graphical mobile payment
Franprix encourages mobile payment

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Will mobile payment become a lasting payment solution?

It’s a certainty: containment pushes the London to change their consumption habits. However, will it be perpetuated or is it an ephemeral trend?

Several elements tend in this favor. First, the health situation accentuates the abandonment of cash payments, which were already suffering from the appearance of contactless. London is below the figures recorded by the European Central Bank for a few years, with 68% of the payments made in cash against 79% for the rest of the European countries. Still a long way from Sweden, a pioneer in this area, 80% of whose payments are made by bank card (mobile, contactless and via VSE combined)!

Although the ban on payment in cash is illegal, it is still recommended to limit as much as possible the contact points where the virus could be transmitted. However, cash payment is considered to be an important transmission vector, hence the systems implemented by the various mobile payment solutions. Some establishments have even banned cash payments.

Excluding confinement, mobile payment has nevertheless gained ground in recent years, proving that the usage trend is increasing. In 2018, the number of transactions made via a smartphone was 10 million according to the Groupement Carte Bancaires. In 2019, in a survey published by Le Monde, we note that:

  • The number of Paylib users almost doubled in the space of a year, between summer 2018 and September 2019.
  • 100,000 new transactions are recorded per month.
  • Société Générale announces that the number of mobile transactions carried out by its customers doubles every 6 months.
  • BPCE lists 350 million euros of transactions made by in-store mobile payment between August 2018 and August 2019, 2.5 times more than between August 2017 and August 2018.

A poll conducted by Galitt in March 2019 indicates that 92% of London people have already heard of payment by mobile phone and that almost 20% of smartphone owners surveyed admit to having used mobile payment at least once.

graphical mobile payment
Source: eMarketer – October 2019

In conclusion

Mobile payment has had a timid entry into the London market. Even before the circumstances that we know of, this practice saw its usage rate increase exponentially over the 2018/2019 financial years. The health measures implemented today are moving in this direction by promoting contactless payment, and by extension payment by smartphone. However, it has fewer constraints (no ceiling) and more security (need for code, fingerprint or easy).

The scenarios are therefore only assumptions, but suggest that this easy solution will extend to more users for several reasons. Notably, the growing ubiquity of the smartphone at every moment of daily life, the number of banks supported by Apple Pay, G Pay and Samsung Pay, and the development of the obsolescence of cash payments.

Finally, the confidence allocated to financial management tech solutions (more than 50% of respondents for Google and Apple, according to a McKinsey study published in 2019) is encouraging as to the conjectures of using the mobile wallet for payment.

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