Mobile app-based payments rise 163 per cent to USD 287 billion in 2019: Report

The app economy is booming. That much is clear from a survey of consumer spending conducted by the Mercator Advisory Group, a Boston-based consultancy. The group was in New York on Thursday to speak at the Columbia Business School and told me that online spending rose 20 per cent last year to $1.6 trillion.

As a percentage of spending, it’s up from just over three per cent in 2015 to almost six per cent now. Which isn’t the whole story: nearly all of that growth came from “digital transactions,” including “mobile payments,” a category in which they participate. In that sense, digital commerce is doing well — it’s consuming a larger share of the economy than it did two or three years ago. But it’s not all good news: by Mercator’s estimates, physical transactions declined, at about the same rate as spending online. This may well be because people are shopping less in stores as a result of the rise of an online-only economy, in which much of a product’s sales are captured by the online marketplace.

Mercator estimates that online purchases will rise ten per cent this year, and physical ones will drop three per cent. Some readers may not be surprised to hear that physical shopping is also going digital. But the Mercator survey sheds light on another important point: mobile apps are both replacing, and adding to, retail. And their role is growing. Digital app-based payments rose 163 per cent to USD 287 billion in 2019, more than the total amount for all other categories combined. That’s up from just less than USD 127 billion in 2015. That’s a remarkable growth spurt, enough to account for nearly 20 per cent of all payments made through digital apps in just two years.

To be sure, mobile apps are, by their nature, ephemeral: the latter part of 2015 was a rough time for some apps; the increase didn’t really show up in store. Another issue is that consumers are relatively quick to abandon a debit card purchase: 80 per cent of them decline a gift card within two weeks, according to Mercator. Another concern is that app users tend to use their phones when, not after, they buy something. As a result, they typically spend more.

Some of those people may be holding out for Apple’s anticipated iCash or Samsung’s Galaxy Pay. Not only do they represent big market share gains, they have built-in brand names and easy-to-use interfaces. And therein lies the biggest threat to brick-and-mortar stores: people tend to get used to easy options, especially ones that can be used with the device of their choice. (Or so many people seem to think.)

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