The New Digital Payment market will be able to exceed 125 billion euros already in 2021. Innovative payments continue to grow at a high rate in Italy: +56%, reaching €80 billion. They come to represent a third of the total digital card payments. Towed by contactless or mobile proximity payments.
There was a boom in proximity purchases via Mobile Wallet. More than 15.6 million transactions are made by Italians who pay with their smartphone in store in 2018. With an annual expenditure of 500 euros per head. Almost 9 out of 10 owners of a Mobile Wallet (l.87.7% of those who have installed applications that support it), use it at least once a week at the point of sale.
The only component of proximity to innovative payments is EUR 49 billion. It includes Mobile Proximity Payment, Contactless and Mobile POS.
The value of online purchases of goods and services via mobile site or app, Mobile Remote Commerce, has increased by 40% to a total of 8.4 billion euros. In the coming years it is estimated that it will reach and exceed the percentage of desktop purchases.
The payment of parking, public transport tickets, taxis, car sharing services and bike sharing continues to grow (+53%), while the number of car-sharing services is increasing. In total, over 180 million euros are worth and are present in more than 460 municipalities (5.8% of the total), inhabited by about 39% of the Italian population.
All these evidences emerge from the new edition of the Mobile Payment & Commerce Observatory of the School of Management of the Politecnico di Milano. Let’s see more details of the study.
In 2018 over 1 billion non-contact transactions were carried out in Italy by contactless card holders. For about €47 billion of total transaction.
In addition to the familiarity with this technology, which consumers and traders have acquired, the number of cards and POS enabled is also growing. Over one card in two (60 million, +17%) at the end of 2018 and more than three POS out of four (1.7 million, +21%) are contactless. It is estimated that contactless payments by 2021 will be worth between €75 billion and €100 billion.
The average transaction receipt \tap & go \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ The figure is lower than the 57 euros of traditional transactions, the contactless is therefore intercepting a share of micro-transactions.
However, the wide distance from the 25 euro threshold (so no PIN or signature is required) also confirms that those who have a habit of using it now use it indifferently for micro or macro amounts.
Payments at points of sale via mobile proximity payment (mobile proximity payment) grow exponentially: +650%. They reach the 530 million euros traded in 2018, with over 15.6 million transactions carried out. Moreover, both the number of people who have used it (1 million in total at the end of 2018) and the average annual expenditure, which exceeds 500 euros per person, are also a good idea.
The feeling is that this 2018 has been a year of transition to increasingly interesting numbers for Mobile Proximity Payment. If expected, the value could reach between EUR 5 billion and EUR 10 billion in 2021.
The value of online purchases of goods and services via mobile site or app (Mobile Remote Commerce) has increased by 40% to a total of 8.4 billion euros. A value of 31% of the total eCommerce, growing compared to 25% in 2017. The penetration tips of furniture are recorded in the sale of products (between 32% of Food & Grocery and 45% of clothing). While it is less in the sale of services (between 9% of insurance and 18% of tourism and transport).
With these premises, it is estimated that in the next three years the Mobile Remote Commerce will reach a value between 17 and 20 billion euros. With a penetration that will reach 50% of the total eCommerce.
Recharges, newsletters and services of the
The Mobile Remote Payment market includes payments of phone charges, bills, newsletters, parking, transport tickets, car rentals, taxis, and so on, through the mobile phone. It reaches €900 million in transaction with a 10% growth, confirming the slowdown in the increase already shown in 2017. It is a market that is mature, but that will still increase in the coming years both in the use by users and in the number of municipalities where services will be active and usable.
Among its components, payments for telephone charges and newsletters remain almost stable, with a total value of around €570 million and €130 million respectively. The mobility markets continue to grow (+53%): the payment of parking, public transport tickets, taxis, car sharing services and bike sharing. In total, over 180 million euros are worth and are present in more than 460 municipalities (5.8% of the total, was 4.6% in 2017), inhabited by about 39% of the Italian population (it was 37% in 2017).
The most important component remains car & bike sharing with more than €90 million and a 49% growth. However, bike sharing is a contraction in terms of the number of cities served (-30%) due to the disposal of fixed-station services in several small towns.
Raddoppiano, instead, the payments of the taxi from app with a value of 40 million euros. Also thanks to company agreements that allow employees to repay expenses. The payment of parking via app, which allows drivers to pay only the actual minutes of parking without passing by a parking meter, proves the most widespread service with more than 360 municipalities served and a transaction that exceeds 35 million euros. Finally, the payment of public transport by app or SMS increases by… 11%, reaching a value of almost €15 million.
Taking into account the development that this component may have in the coming years, it is estimated that the Mobile Remote Payment will be worth between 1.2 and 1.6 billion euros over the next three years.
Mobile POS (terminals connected to the operator’s smartphone) have managed to cut out a small but very important piece of Italian market in recent years.
Important because it consists mainly of operators not yet equipped with terminals for the acceptance of card payments. The 38% increase in the transaction value compared to 2017 (for a total of almost €1.5 billion) shows that pricing policies linked to these instruments (usually based on low fixed costs of activation and rent and on higher variable transaction costs) are very high
The number of transactions (100 transactions per POS per year) and the transaction value per POS (€9,000 per POS per year) are, in fact, a couple of orders of magnitude smaller than the traditional POS. It is estimated that in 2021 payments to Mobile POS will be between €1.8 billion and €2.2 billion.
Even in Italy, the Mobile Wallet market is a market with good maturity. With the entry of large international players, he pushed the accelerator to the maximum on the optimization of the usage experience in the perspective of a Customer Centricity that puts the same user at the center of the experience.
Fabrizio Andreose, Client Partner Banking & Insurance Insights Division of Kantar, highlights the following. • The quantitative survey has turned to 6.822 between users, powerful users (users who have downloaded the app, but have not yet used it) and mobile’s rejectors (users who never use the services) In 2019 we see a significant growth of users using Mobile Payment services for payment at the point of sale (87.7% of those who use applications that support it), which effectively marks the overtaking in the first place compared to online payment (81%). The payment in the store also records the highest frequency of use, about 1 time a week while the online payment is about 2 times a month.
The use of money transfer services to other people (76.8%), mobile phone charging (69.7%) and bill payment (62.4%) is also widespread and widespread. Almost all users (93% on average) of Mobile Wallets that allow it, finally, consult the balance of the card or account at least once a week. Mobile Wallet users are satisfied on average: on a scale of 1 to 10, the 9 Mobile Wallet are rated from 8.2 to 9.3. 66% of Mobile Wallet users award votes between 9 and 10; more generally, 8 Mobile Wallets out of 9 users express a majority of excellence ratings.
Watching the Future
For some years now, the Mobile Payment & Commerce Observatory has been undergoing a profound transformation. If at the beginning it was thought that smartphone payments could be the end of this mutation path, today there are more innovations.
The first level of innovation concerns enabling platforms, back office solutions that can be used to build the innovations used by users. Inside, there are innovation guidelines such as: Open APIs and artificial intelligence, linked to interfaces with existing systems. L Blockchain, for the creation of new platforms that can simplify interbank exchanges or financial intermediation
This technology is based on the second level: devices, physical devices that consumers can use to make payments, and interfaces. The main innovations in this area are: smartphones, smart objects and voice assistants. Finally, in the third level, there are process innovations that impact on the phases of purchase, payment and authentication.
The transformation in progress is driven not only by technological innovations, devices and processes, but also by the increase in competition. In addition to traditional actors, they enter this market with payment services, Big Tech, device manufacturer, online marketplace, social networks, instant messaging platforms. In addition to these types of actors, new fintech companies are emerging, specialised in payments that often attract high interest among investors and among the public.
In parallel with these already ongoing trends, competition in the world of payments is further facilitated by legislation. New regulations, based on the Open Banking concept and the technological paradigm of the Open API, are in fact being transposed in Europe (PSD2) as well as in the rest of the world.
Comments from the Mobile Payment & Commerce Observatory
Alessandro Perego, Scientific Manager of the Digital Innovation Observatorys of Milan, declares the following. • In 2018 payments by card in Italy rose to 240 billion euros, equal to 37% of payments by Italian households, with a growth of +9%. Italians are using the card more and more: the number of transactions per capita is 69.6 today compared to 60 in 2017. Growth, albeit higher than the European average, is still not sufficient to allow Italy to scale the European ranking, far from the most performing countries such as Denmark, Sweden and the United Kingdom, which record more than 300 transactions per capita per year. It is positive however to note that, confirming the trend of the last few years, the average value of each transaction that is attested around 57 euros/transaction regarding the 60.5 euros/transaction recorded in 2017.
•New Digital Payment continues to grow at a high rate (+56%) and reach a third of the total digital card payments for a total of 80 billion euros. This growth is driven in particular by the proximity component of Contactless cards and payments close to Mobile (Mobile Proximity Payment), which we estimate can continue in the coming years exceeding in 2021 the 125 billion euros. Mobile Proxyity Payment, in particular, has had a very important growth (+650%), with over 15.6 million transactions made in the shop with the smartphone, for an equivalent of 530 million euros. Valeria Portale, Director of the Mobile Payment & Commerce Observatory, adds.
More information on the activities of the Digital Innovation Observatories of the Politecnico di Milano are available at this link.