20 million Brits to use mobile payments by 2020
The value of mobile purchases of goods and services in the U.K. will rise from £4.8 billion ($7.85 billion) in 2013 to £14.2 billion ($23.22 billion) in 2018, according to a study by the Centre for Economic and Business Research. The U.K.-based research organization, which was commissioned to carry out the study by m-payments firm Zapp, projects that more than 20 million Britons will be using mobile payments by the end of this decade.
In a press release, CEBR said that, by 2020, mobile payments will represent 1.4 percent of total U.K. consumer spending.
The report highlights several areas where the group expects mobile payments to benefit U.K. consumers, businesses and the government.
Fraud losses on U.K. plastic cards stood at £388 million ($634 million) in 2012, with £68 million ($111 million) of these losses from cards lost, stolen or intercepted in the post. Card ID theft also led to £32 million ($52 million) of fraud losses. The report argues that secure mobile payment systems requiring PIN identification have the potential to reduce this type of card fraud significantly.
The report said cash is the most expensive mainstream form of payment — once costs such as store count, preparation and transaction errors are factored in — at 2.8 percent of cash takings. The transaction cost of debit and credit cards amounted to 1.1 percent of total plastic card takings.
Moving away from cash and card payments to lower-cost and more secure mobile payment methods will help businesses reduce their cash and card processing costs, Cebr said.
More than a quarter of U.K. consumers incurred an overdraft charge in 2012. The greater transparency offered by mobile payments, which can allow instant bank account balance checking, should leave many consumers better informed and able to avoid tipping over the edge of their authorized limits, the report argues.
Also, the adoption of mobile payments by small businesses has the potential to move the "cash in hand" economy over to mobile payments, the report said. This will help reduce the "tax gap" in the economy — the difference between tax collected and the tax that should be collected. With the tax gap estimated to cost the government £32 billion ($52 billion) per year, mobile payments could provide a substantial boost to government finances by improving transparency of earnings.
By offering instant settlement, mobile payments should provide some respite for the many businesses in the U.K. struggling with cashflow issues. The report highlights that 24 percent of U.K. businesses reported late payments from customers to be a greater challenge in the third quarter of 2013 than a year ago.
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