Mobile payments, an increasingly more common shopping channel in Spain
Growth in mobile payment use in Spain is still limited: the consumer habit transformation process always takes time. However, there is a wide offering of services linked to mobile payments, particularly from banks and leading tech companies, with a view to seducing a growing market.
The market is significantly big: according to the consulting firm Kantar Media, 94% of Spaniards use a smartphone vs. 41% six years ago. But, how many of them use this device to make payments?
According to the latest Consumer Insights Survey report released by PwC, in 2018 around 14% of Spaniards have shopped using their smartphone at least once a week, i.e. three percentage points lower than the world average (17%).
Even though this shopping method still has a lot of room to grow in Spain, its upward movement is unstoppable and there is double the market penetration than in 2016 (only 7% of Spanish consumers used their smartphone to shop at least once a week).
Spanish consumers can choose from countless options to pay from their smartphone. There are products launched by smartphone manufacturers, telephone companies and banking institutions.
None of them want to miss out on this opportunity. So, solutions offered by Google, Amazon, Facebook, Apple, Samsung, Movistar, Vodafone, Orange, BBVA, CaixaBank and Santander coexist in the market.
Google Pay and Apple Pay are widely known. However, there are less established albeit interesting alternatives such as Samsung Pay, available for BBVA Compass costumers, and the solutions offered by phone companies such as Orange Cash. And the financial industrial offers its own products.
The banking sector's solutions in Spain
In addition to Google Pay and Apple Pay, BBVA offers BBVA Wallet, its own mobile payment application. It is available both on Google Play, for Android operating systems, and on App Store, for iOS operating systems. The purpose of this service is for BBVA customers to be able to pay for products and services using their smartphone with the same username and password used to access their private area on bbva.es.
The app is compatible with several cards, and records in a continuous feed each payment associated with the card used for paying. One of BBVA Wallet's advantages consists in the discount packs in all kinds of products associated with using it; there is also the possibility of geolocating them from the app.
CaixaBank has designed CaixaBank Pay, a virtual wallet available for both Android and iOS. By downloading the app, any CaixaBank customer can withdraw money from ATMs or pay at physical retail stores directly with a smartphone on the POS terminal without touching it, thanks to compatibility with NFC (Near Field Communication) technology. Also, CaixaBank is associated with Ealia, a peer-to-peer mobile payment system: users can deposit money directly in the payee's account by simply entering a smartphone number or an email address.
Santander Wallet is another virtual wallet associated with a banking institution. The app enables mobile payments using NFC technology on Android and iOS devices. It enables users to send money to the contacts in the address book without entering the payee's account. The payment method provides access to all the information on transactions or services associated with the cards with the possibility of carrying out several transactions.
These are not the only mobile payment methods offered by banks in Spain. There are plenty of other examples of smartphone payment apps, e.g. virtual wallets Sabadell Wallet and Bankia Wallet and the ING Direct application.
Success models in other markets
Against the timid progress in markets such as the Spanish, there are other examples of the potential of mobile payments, while allowing for the local differences in banking penetration and the economic and business systems. One of the most remarkable examples is Kenya.
M-Pesa (M stands for mobile and "Pesa" stands for money in Swahili) is a mobile product offered by Safaricom, Vodafone's subsidiary in Kenya. M-Pesa allows users to pay and top up their mobile balance, send money to users and non-users, withdraw money from ATMs, etc. Its success is derived from being a system that leads to banking penetration without having to open branch offices.
Launched in 2007, Safaricom started with pilot projects involving less than 500 people with a view to creating profiles of all technological and user experience aspects. Then, the service was launched through 750 physical stores in Kenya's 69 regions albeit not without technical issues. However, in March 2016 M-Pesa reached 25 million users in Africa, Asia and Europe (Romania).
The idea is for it to expand to the rest of Africa through such countries as Uganda, Tanzania, South Africa, the Democratic Republic of Congo, Mozambique, Lesotho and Ghana.
With the aid of payment processors such as M-Pesa, almost 60% of Kenya's population uses their cell phones to make all kinds of payments and collections without having to go to a branch. They have been given a service they were demanding through a device they already knew, their cell phone. In this way, the financial circuit has incorporated people who were completed outside its reach.
Aside from the extraordinary case of Safaricom in Kenya, experts always say that China is a perfect example of how mobile payments will evolve worldwide. This is the microclimate that foreshadows the natural progress of consumer habits as regards mobile payment: in 2015 the smartphone was already the main payment tool among Chinese consumers.
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