Evolution of Payments: The Rise and Future of Mobile Transactions

 The history of payments has featured numerous innovation milestones. And when looking at the future of this innovation, and where mobile payments potentially can take the industry forward, it helps to look to the history first.

A long time ago, only gold and other valuables traded hands in transactions. Then in time coins and notes took over this and people learned to use the concept of money. Disruption followed in the form of cheques and wire transfers which allowed payments to be made faster and remotely. Bank cards and the use of electronic payments were the next big gamechanger, giving people new access to their bank accounts (and credit lines). Towards the end of the millennium, the birth of the internet swept through, and people were soon making regular transactions online.

Then everything changed with the innovation of mobile payments.

The use of mobile devices to facilitate payments is truly a major innovation in the world of payments and commerce. Vendors and banks have engaged with this technology and brought people a seamless user payment experience in the palm of their hand. This market is now vast, worth $94.5bn in 2024 but now expected to expand rapidly with 34% compounded annual growth to reach $408bn by 2029. 

These kinds of figures are anticipated as penetration of mobile technology is still growing, even in 2024 and 17 years after the creation of the first iPhone. In the second quarter of this year, global smartphone ownership still managed to grow by 6%.  This demonstrates remarkable longevity and doesn’t even factor in the parallel usage of other mobile devices such as tablets and smartwatches.

Boxout: The biggest mobile payment firms

With low barriers to entry, some of the most exciting fintechs emerging in the world of mobile payments. Here, we have ranked some of the biggest and most innovative names to watch: 

1. PayPal

• Headquarters: San Jose, USA
• Founded: 1998
• Active users: 426m

2. Alipay

• Headquarters: Hangzhou, China
• Founded: 2004
• Active users: 2bn

3. PagSeguro

• Headquarters: São Paulo, Brazil
• Founded: 2006
• Active users: 16m

4. SumUp

• Headquarters: London, United Kingdom
• Founded: 2012
• Active users (businesses only): 4m

5. OVO

• Headquarters: Jakarta, Indonesia
• Founded: 2017
• Active users: 110m

6. bKash

• Headquarters: Dhaka, Bangladesh
• Founded: 2010
• Active users: 70m

7. Nexi

• Headquarters: Milan, Italy
• Founded: 2021
• Active users: 2.4m

8. PayMaya

• Headquarters: Manila, The Philippines
• Founded: 2013
• Active users: 58m 

9. Venmo

• Headquarters: New York, USA
• Founded: 2009
• Active users: 60m

10. GCash

• Headquarters: Manila, The Philippines
• Founded: 2015
• Active users: 81m

 

What’s next?

Since 2007, new generations of tech users have grown up with smartphones and similar devices. Otherwise known as ‘digital natives’ they are simply more attuned to using this tech in their day to day lives. With devices in the palms of Gen Z, mobile payment solutions are offering unprecedented levels of access to these consumers. There was a time when financial services institutions struggled to meaningful engage with younger generations. Smartphone tech has now solved this access issue, with mobile solutions seamlessly engaging them as customers of financial services institutions.

Elsewhere, contactless payments are continuing to gain momentum. The use of Near Field Communication and QR code-based transactions became particularly prevalent during the pandemic when contact had to be limited. However, this opened people’s eyes to the ease and convenience of contactless as a form of mobile payments. This has exploded in popularity since then with a record 93% of in-store card transactions using contactless payments in 2023. Interestingly, this isn’t limited to younger generations and 80% of consumers aged 85 to 95 revealing they now pay with contactless.

Of course, security has had to be heightened. If a person’s device were stolen or misplaced, they would risk losing access to their payment accounts. Fortunately, tech innovations have paved the way for biometric authentication to enhance payment security. This has not only reduced the risk of fraud or crime but made consumers more at ease with using mobile payments for larger transactions. The tech is now being continually enhanced to make biometric authentication even more secure, and mobile payments increasingly convenient.

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