USA Technologies Inc (USAT)

[FUNMAN]

Are Mobile Payments Finally Gaining Steam?
Mobile wallets like Apple Pay look poised to gain more traction, and millennials are spurring greater adoption of Venmo.
By Emily Bary
Feb. 2, 2017 10:39 a.m. ET

http://www.barrons.com/articles/are-mobile-payments-finally-gaining-steam-1486049997

Mobile payments were supposed to have been a big deal by now, but so far consumers and retailers haven’t been that jazzed about them.

The industry is expanding, though, and it could grow at a 20% annual rate in the U.S. for the next five years. Research firm Forrester sees digital payments hitting $283 billion by 2021, up from an estimated $112 billion at the end of 2016.

“Remote” mobile payments, like in-app purchases, are still the most popular. These includes things like paying for an Uber with a stored credit card. One trend that could spur those kind of payments: Consumers are increasingly willing to store their credit-card information with merchants. About half of consumers are now fine doing so, whereas only 37% of people felt that way in 2015, per Forrester.

Relatively new technologies are also taking off. There’s Venmo, owned by PayPal, which is a big player in peer-to-peer mobile transactions. Even though you can transfer money to friends pretty easily just using your bank’s site, young adults prefer the Venmo way. Venmo handled about a quarter of all peer-to-peer transactions in 2016, according to Forrester.

Turns out, millennials are so attached to getting paid this way that they’re making older folks get the app. Forrester’s Brendan Miller wrote that Venmo “is now gaining traction with other generations who interact with and need to transfer funds to millennials.”

Meanwhile, mobile wallets, like Apple Pay and Samsung Pay, may be the fastest growing segment of the digital payments industry in the next few years. The key here is security. These services store users’ credit-card info and transfer one-time tokens to merchants, meaning actual numbers never get sent.

Apple Pay has been slow to catch on, but Apple CEO Tim Cook said on the company’s earnings call Tuesday that transaction volume during the latest quarter was up 500% relative to a year before. Granted, that’s partly because the company made the service available in new markets -- and turned it on for Mac users -- but it’s a sign things are headed in the right direction.

Big Picture: Apple Pay and other mobile wallets still look poised to grow quickly. Meanwhile, millennials are converting older generations to Venmo.