Meeker Report Highlights Growth of Digital Payments
Jacqueline Cremos
The state of the internet is strong. Mary Meeker, general partner at venture capital firm Kleiner Perkins, presented her highly-anticipated 22nd annual Internet Trends Report in Rancho Palos Verdes, California, last week. The report presents data and analysis on a wide range of topics relating to the growth of the Internet economy. It’s a big deal for the tech world – and for the payments industry in particular. This year’s report heralded promising new opportunities in mobile payments and ecommerce.
Highlights from the report include:
Partnerships Matter
The future of payments is all about partnerships. Tech giants are partnering with social media platforms to enhance the user experience. Just watch Uber and Foursquare work together to bring riders in-app recommendations for nearby restaurants and businesses. Payments technology is embedded in the entire process – you book a ride, you pay at the point of sale with a card or a mobile wallet – but it’s largely invisible to the end consumer.
E-commerce is Growing
Online retail sales have been growing steadily for decades. Sales volume grew to nearly $400 billion in 2016, up from $160 billion in 2010 – a 150% increase over six years. Year over year growth in online retail has been accelerating since 2013. Amazon is driving this growth and becoming a one-stop “subscription store” offering services like cloud storage, news, entertainment and much more. Amazon Echo now boasts 12,000 different “skills,” from shopping to media recommendations and streaming.
Ecommerce penetration in the U.S. (as a percentage of total retail sales) is about 11% – South Korea leads the pack with 18% penetration, followed by the U.K and China at 15%.
Cybersecurity is Still Critical
In 2016, there were 15 cyber breaches that exposed over 10 million identities (there were 11 such breaches in 2014). Bot traffic overtook human traffic on the web for the first time since 2014. Securing consumer data remains a vital task. Thankfully, the payments industry is working tirelessly to deploy innovative solutions that protect sensitive information while ensuring a convenient and seamless payment experience for consumers.
New Technology Takes Time
It took 13 years for 25% of Americans to own a cell phone after they first hit the market in 1983. It only took 7 years for the Internet to reach 25% adoption. The pace of technological adoption is speeding up – but it’s not instantaneous. Persuading early adopters and high-end shoppers to embrace a new technology is critical. The data shows that reaching 50% adoption takes far less time than reaching 25%. For instance, after 25% of Americans owned a cell phone (13 years after it became available on the market), it only took another 4 years for 50% of Americans to own one.
Chinese Consumers Embracing Mobile
There are 700 million mobile internet users in China, spending the majority of their time on Tencent apps (like WeChat) and Alibaba apps. This is crucial for the growth mobile payments, as Tencent and Alibaba represent over 90% of the Chinese mobile payments market. Mobile payment volume in China more than doubled in a single year, growing from $2.4 trillion in 2015 to over $5 trillion in 2016. In fact, B2C eCommerce is largely mobile by value, with mobile eCommerce Gross Merchandise Value (GMV) more than twice the value of desktop eCommerce.
India is Dropping Cash
After undergoing rapid demonetization starting in November 2016, India is building a digital payments infrastructure. There were 215 million registered Paytm users in March of this year, up from just 22 million in November 2014. The move to cashless is supported by growing internet penetration – there were an estimated 355 million users in 2016, up nearly 30% from 2015. 80% of Indian web traffic is mobile, compared to 50% worldwide and just 40% in the United States. This presents huge opportunities for mobile payments – India’s Unified Payments Interface (UPI) processed $359 million in digital payments in March 2017, up from $5 million in September 2016. UPI represents about 30% of total mobile wallet volume in India.
This is fantastic news for the payments industry. The digital world is creating new markets and touching new consumers every day. Our industry is embracing that disruption head on and using it to serve our customers and make commerce happen.
Jacqueline Cremos is a Manager of Industry Affairs at ETA. She can be reached at 202.677.7413 or [email protected].