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2010 dramatically changed how we think about how people and businesses exchange money. We saw ecommerce continue to grow and we saw emerging channels take flight with consumers and merchants of all sizes.
As great as last year was for innovation in payments, we’re just getting warmed up. This year we should expect to see some incredible innovations that will change how we pay and get paid, and on a broader scale, change how we view physical currency (spoiler: This will be the beginning of the end for cash). Below are some of my thoughts on how payments will evolve in the next year. I’d love to get your opinion in the comments section.
Mobile, mobile, mobile
Wallet in the cloud. The digital wallet. Call it what you want, but mobile devices are poised to become a primary form of payment for millions of people around the world. According to Aite Group forecasts, mobile bill payments will reach $214 billion in gross dollar volume in 2015, up from $16 billion in 2010, which represents a 68 percent compound annual growth rate. A November 2010 Aite Group report stated “Over the past 12 to 18 months, the United States has begun to move closer to a tipping point that will lead to the popularization of mobile payments.”
At PayPal, we couldn’t agree more with this statement, and our numbers back it up. Consider that PayPal saw a 310 percent increase in mobile payment volume on Black Friday 2010 compared to the previous year, and a 292 percent increase in mobile payment volume on Cyber Monday 2010 compared to Cyber Monday 2009. Without a doubt, mobile payments are here to stay and will see significant innovation in the coming year.
Despite recent reports indicating Americans now spend as much time on the Internet as they do watching television, the TV is ripe for innovation as more and more consumers connect them to home networks, which opens up a new world of possibilities. For starters, the level of interactivity people will have with their television stands to undergo a major transformation. TV will go from a passive (viewing-only) experience to a highly interactive activity as more and more apps are developed specifically for the platform.
From our point of view, part of that interactivity will be the ability to conduct a wide variety of transactions through a television. Companies like FourthWall Media and Canoe Ventures are pioneering some amazing technology that will bring a unique shopping experience to your living room (or wherever your television happens to be).
IDC issued a new report that says, among other things, over the past three years the mobile apps space has seen an “appification” of “broad categories of interactions and functions in both the physical and the digital worlds.” And this only stands to continue — in fact, the same IDC report projects mobile app revenue to grow from $4.9 billion in 2010 to $35 billion by 2014.
In terms of payments, app developers are increasingly focused on monetizing their work and we continue to build and refine the types of tools and solutions to enable them to do just that. We’ve also shared our plans to get in to the app game as well, which will be exciting to watch develop in the coming months.
Social shopping is clearly poised for significant growth — in fact, Ovum retail analyst Christine Bardwell was recently quoted as saying “… 2011 will be the year when social commerce will really take off.” With hundreds of millions of people connecting with friends, family and colleagues on social networks (not to mention spending in insane amount of time on them), it’s only natural that merchants of all sizes would follow them.
Among the key drivers of this trend are micropayments and digital goods. Along the same lines of merging physical world experiences with digital activity, the ability to make quick, small purchases for online content represents a huge opportunity for both content producers and providers.
When you combine the notion of social shopping with group buying you get a very powerful experience that has the potential to appeal to millions of consumers. From our perspective, we’re just starting to see the tip of this iceberg emerge.
A Cashless Society
Now let’s not go crazy here, I’m not suggesting that by this time next year we’ll be living in a cashless society. Far from it. That said, 2011 will undoubtedly see several significant steps that will take us closer to such a world. As we close out 2010, you can already transfer checks simply by snapping a photo on your mobile device, send money to others by bumping your mobile phones together and you can even buy your lunch, a latte, or other goods by swiping a mobile device in the same way you would a credit or debit card (and even earn rewards for doing it!).
Osama Bedier is vice president of platform, mobile, and new ventures at PayPal.
[top image via Flickr/uhuru1701]
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