The field of mobile payments presents massive opportunities for the travel industry. For travel managers, the prospect of gaining real-time and transparent expenses data, reducing fraud and improving safety is attractive. For corporate travellers, the simple prospect of cumbersome cash becoming a thing of the past is irresistible.
It’s estimated that in-store mobile payments will reach $503 billion by 2020 in the US alone. The launch of Apple Pay in 2014, and subsequent Android, Samsung Pay and Google Hands Free systems has put the power in the hands of almost any consumer with a smartphone today.
So the opportunity is begging, the technology is there, and a reported 39% of mobile users in the US made a mobile payment in 2015.
It’s somewhat surprising then, that the corporate travel industry is playing catch up.
Below we explore the current state of mobile payments in the industry, the unique challenges it faces, and why millennial travellers may just be the key to ubiquity in 2017.
The Evolution of Mobile Payments
The phrase ‘mobile payments’ isn’t a new one in the travel industry. In fact, Google Trends analysis shows consistent online interest in the term since the mid 2000s.
The history of making electronic payments is a fascinating one. In the years prior to PayPal’s founding in 1998, there were digital cash innovations, like David Chaum’s cryptocurrency work in the early 1980s. However, many believe the very first online purchase came in 1994, in the form of a large pepperoni, mushroom and extra cheese pizza from Pizza Hut.
Mobile users became active proponents of these early innovations, with 95 million of them globally making a mobile purchase as early as 2003. However, like most elements of the early internet, mobile payments have evolved substantially.
For example, the formation of the Bitcoin currency in 2008 signalled a new chapter for the cryptocurrency movement, but also paints a telling picture of widespread adoption challenges. The intrigue and scandal of the Bitcoin saga, fuelled by online drug dealers, hackers, ambiguous founders and monumental financial losses, did nothing to instil trust in the currency for everyday internet users.
Today, however, abandoning cash seems like an inevitability, especially given that Apple, Samsung, Android and now Google have introduced mobile payment solutions. The predicted resurgence of wearable technology in 2017 will also bolster the mobile payments movement, offering improved convenience and security to consumers.
Why Millennials Will Lead the Charge for Mobile Payments in Corporate Travel
In Business Insider’s 2016 Mobile Payments Report, consumer interest is the most significant challenge for the mobile payments industry to overcome.
“Surveys indicate that the issue is less the mobile wallet itself and more that people remain loyal to traditional payment methods and show little enthusiasm for picking up new habits,” the report reads.
Unsurprisingly, much of this resistance to adoption is exercised by older consumers. An eMarketer report found that in 2015, just 3.5% of those 65 and older used mobile payments, compared to 17.5% of 25 to 34-year-olds.
The same report predicts that in 2017, 37.0% of the younger population will have embraced mobile payments, compared to just 6.5% of older consumers.
Put it down to millennials being ‘digital natives’, or simply lacking a cemented allegiance to cash payments, but younger corporate travellers will no doubt lead the charge for adoption of mobile payments in the industry.
Security is the key to more senior employees embracing the technology, according to eMarketer analyst Brian Yeager.
“Security concerns are more pronounced among older consumers,” he says. “Ultimately, mobile wallets will need to have a strong track record of security to attract more user across all demographics long-term.”
Despite some resistance to mobile payments in the corporate travel space, the enduring demand for real-time and cost-effective expense visibility will drive further innovations.
For more information on the trends that are redefining business travel, download your free eGuide, '5 Corporate Travel Trends to Watch in 2017' below: