When talking mobile payments and mobile commerce, the philosophy "less is more" comes to mind.
Less friction. Less time. Fewer steps to checkout. That's pretty obvious.
But what's not obvious quite yet is who –and how – we’ll get there.
One group of innovators is hoping that one of those ways is via mobile messaging.
You can see why they might think that way. eMarketer released data this month that shows how fast mobile messaging has grown on a global basis. They say that when 2015 is all said and done, mobile messaging apps will be used by more than 1.4 billion global consumers in 2015, a 31.6 percent increase from 2014. Seventy-five percent of them also use a mobile messaging app at least once a month.
It’s also on a rapid growth trajectory.
In just three years' time, by 2018, the number of chat app users worldwide is expected to cover 80 percent of smartphone users. By 2016, app usage is projected to jump to 1.6 billion and to roughly 2.2 billion by the year 2019.
So, not surprisingly, the companies with popular mobile messaging apps are exploring ways to embed payments into those mobile messaging platforms. Taking a page from Tencent’s WeChat playbook, players like Facebook Messenger are experimenting with ways to insert payments into the mix.
For Facebook, its executive team has been eyeing payments for years. But that vision really took off in 2014 when Facebook hired PayPal's then-CEO David Marcus to run its Messenger division. Marcus is also an avid student of what Tencent has done to make WePay its own commerce ecosystem.
Now the big question for Marcus, Messenger and Facebook is whether Marcus, who believes that commerce can be streamlined by making it easy for consumers and merchants to interact in real time in the context of a commerce experience, will use those skills and experience to deliver a payments and commerce edge for Facebook. And, if he’s successful, what that will mean for his alma mater and every other mobile payments scheme vying for their fair share of the commerce pie.
Facebook's Messenger has roughly 700 million users, and counting. Tencent now has 200 million users on its payments service that’s linked to its mobile messaging app, WeChat. Messaging and its payments services are becoming a greater part of Tencent's overall growth strategy — even if it takes time to get there. WeChat and Weixin (its Chinese version) together now have 650 million monthly active users across the apps. Weixin can also be used to pay bills, make P2P transfers and buy items online.
Samsung Pay is also taken by the allure of the law of large numbers and app engagement driven by mobile messaging. Phone-to-phone-payments is rumored to be on their docket, as reports suggest that they are working on a technology that enables payments to be exchanged between smartphones using NFC chips.
Even in the business world, TranServ, an India-based digital payments startup, is now looking to capture more of the small and medium-sized business market with its services that allow companies to integrate payment options on both Facebook and mobile messaging service WhatsApp.
In other regions of the world, mobile payments — as a result of mobile messaging — has ignited an entire new industry.
For example, mobile payments have been changing the financial landscape of Africa since the 2007 launch of M-Pesa in Kenya. Named for the Swahili word for money, M-Pesa allows for easy fund transfers via SMS text messaging. Eight years after its launch, Kenyans can do almost everything from routine grocery shopping, to settling their utility bills, to paying their doctors via text message.
Mobile payments' popularity in emerging markets such as Kenya has been a real game changer for people who previously didn't have the financial access points to keep connected in the mainstream financial ecosystem. But for a little under 20 million Kenyans – not to mention millions of others spread around the world from Tanzania, to India, to Afghanistan, to Romania – mobile payments, in the form of the M-Pesa service – and the opportunities it has made possible – have been exactly that.
When breaking down mobile phone messaging app by user penetration rates (see chart above) over the next few years it begins to paint a picture of the potential for the market. Worldwide, the penetration rate (percentage of mobile phone users) using mobile messaging is expected to hit 43.3 percent by the year 2019 — and that's with a growth factor of a few percentage points per year.
For North America, the rate is higher than the worldwide average, totaling a 64.9 percent penetration rate by 2019. Following that is Latin America (53.6 percent), Western Europe (51.2 percent), Asia-Pacific (43.8 percent); Central and Eastern Europe (48.6 percent) and the Middle East and Africa (21.9 percent).
In terms of how much of the actual population is turning to mobile messaging, in four years' time, eMarketer's figures show that North America totals in at 53.5 percent, but places like the Middle East and Africa are projected to hit just 11.2 percent of their population using the services. Other regions, like Western Europe, LatAm Central/Eastern Europe and the Asia-Pacific regions all range between 30-42 percent in that same category.
Of course, the mobile messaging space is getting crowded, but Facebook and WhatsApp are beginning to be known as the globally accepted options as they reach more than 20 countries. That's expected to grow as Facebook grows its reach (through its Internet.org push), which will bring more users online, more users onto its app and more users into Messenger and WhatsApp.
And while, worldwide, the figures for mobile message app usage continue to grow a few percentage points per region each year, it appears for now the mobile messaging app adoption rates may continue to be a slow burn.
Much like the mobile messaging and mobile payments options in the ecosystem today.