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Smart spending: mobile payments on the rise

While many consumers still feel a bit of trepidation about making a purchase from their smartphone or tablet, that is set to change, and fast. According to the latest research from eMarketer, increased exposure to mobile payments is helping to drive a wider adoption of this new way to pay.

In the US, mobile payments, or proximity spending, doubled between 2012 and 2013 to $1.59 billion. eMarketer projects transaction values will double again this year to reach $3.50 billion and further accelerate through 2016 as more users come on board and make increasingly larger mobile purchases. Mobile spending includes point-of-sale purchases made using a mobile device by tapping, swiping, scanning or checking in with a mobile device at the point of sale to complete a transaction. It excludes purchasing digital goods and remote purchases of items that are delivered later.

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Although just less than 15 per cent of US consumers said they had made a mobile payment in an August 2014 survey, more than 50 per cent thought mobile payments would likely become widely used in the next few years, and more than 20 per cent were certain mobile purchases would become a widespread reality.

In New Zealand, various banks are trialling their own mobile wallet technology, allowing customers to make payments from their smartphones. Westpac says its mobile wallet project is on track to launch in the first quarter of 2015, allowing customers to make contactless credit and debit card payments at the point of sale by using their smartphone. And ASB and BNZ have teamed up and are set to roll out a trial of a national mobile wallet service for Android users next year.

So how does the technology work?

The technology is known as host card emulation (HCE). HCE stores credit and debit card information in a remote hosted cloud accessible by smartphones. Users then download a wallet app and register their card details, which they use to make contactless payments: they will simply tap their phone over a special contactless terminal, in place of a debit or credit card.

What does the future look like?

Apple included mobile wallet technology in the iPhone 6. The service, known as Apple Pay, launched in the US with American Express, MasterCard and Visa. McDonalds will have compatible tills, along with Disney’s theme parks and the Whole Foods Market. Developers will be able to build apps for Apple pay from next month.


Many chains in the UK and the US already accept mobile payments, allowing devices such as the iPhone 6, which incorporates a near field communication (NFC) chip, to be placed near an NFC till and a contactless payment made. Starbucks and Pret a Manger were among the first chains to adopt the technology.

With mobile wallet technology developing at pace, a cashless society looks to be somewhat closer than expected, and New Zealand is by no means at the back of the race to a tap-and-go future.

What are your thoughts? Would you use your mobile to make purchases?