Person looking at mobile phone
Smarter Payments

The Opportunities—and Savings—Inherent in Mobile Payments

The rapid adoption of smartphones around the world is driving an increase in mobile payments. For many consumers, paying with a mobile device is simply more convenient—but there are also benefits for businesses, and catering to this emerging consumer preference can help companies streamline operations and reduce costs.
Andrew Stache, Head of Wholesale Digital Payments, J.P. Morgan Commercial Banking
March 21, 2017

Smartphone ownership in the United States is approaching total saturation. In the third quarter of 2016, 88 percent of Americans owned a smartphone, eight percentage points higher than a year earlier, according to Nielsen. Ownership is highest among younger generations: 98 percent of 18- to 24-year-olds own smartphone; 97 percent of 25- to 34-year-olds own a smartphone; and 96 percent of 35- to 44-year-olds.

Consumers around the world are also increasingly using smartphones, notably in emerging markets. The Pew Research Center reports that smartphone ownership in developing countries grew from 21 percent in 2013 to 37 percent in 2015. Since 2013, smartphone ownership in Turkey has grown 42 points; in Malaysia, 34 points; and in both Brazil and Chile, 26 points.

Increasing smartphone adoption is, in turn, increasing rates of mobile payments. A 2016 Federal Reserve survey reveals that 28 percent of smartphone users made a mobile payment in the previous 12 months. Also in this survey, 65 percent of respondents reported using a smartphone to pay a bill, 42 percent said they had used their device to purchase a physical item or digital content, and 33 percent used their smartphone to make a retail purchase at the point of sale.

The volume of mobile payments is being driven in part by the growing inclusion of NFC technology in new smartphones. An NFC chip allows a user to submit a payment by holding his or her phone near a point-of-sale device that can wirelessly receive the mobile payment. Research firm TrendForce reports that more than 60 percent of smartphone shipments in 2017 will include NFC capability, and given these trends, global mobile payments are forecast to reach $780 billion by the end of 2017. By 2021, Forrester forecasts that mobile payments in the United States alone will reach more than $282 billion.

The increasing prevalence of mobile payments creates an opportunity for businesses to find new cost savings and efficiencies in their operations. Businesses accepting paper checks and using them for disbursements are incurring costs in labor, supply and equipment. Nearly 50 percent of the cost of a check is owed to the labor required to create and reconcile it. These labor costs are coupled with missed productivity. The time spent working with paper checks could be better spent on more important tasks, such as following up on overdue accounts. With mobile payments, businesses reduce distribution and reconciliation costs, as well as the risks associated with checks. They can also eliminate the burden and expense of maintaining customer account and remittance information.

Mobile disbursements can likewise offer business savings and efficiencies, streamlining payments to payrolls, account-to-account transfers and business-to-business transactions. Mobile and web-based payments can be achieved with an email address and mobile phone number. The payee receives an email and provides a US bank account to initiate the ACH payment. And with the ongoing implementation of the ACH Network’s same-day payment settlement initiative (Same Day ACH), businesses have the opportunity to streamline payments and expand cash flow and working capital, as well as reduce paper-based processing costs.

Incorporating a new payment type requires careful implementation. The Federal Reserve survey found that the most common reason respondents made a mobile payment was convenience. Yet 67 percent of respondents who reported not using mobile payments cited security concerns. Thus, experience and careful implementation are critical: Businesses should educate their consumers about what to expect from the mobile payment experience. Encouraging customers to engage and accept the new payment method also requires strong branding and rapid remittance payment. And since not all consumers are making mobile payments yet, it's important for businesses to continue offering alternative payment options.

With smartphone market penetration and mobile payments continuing to grow, businesses have an opportunity to incorporate advanced payment solutions online and at the point of sale. But implementing the right merchant and payment services can help your company capitalize on emerging technology and consumer trends, improve receivables management, enhance cash flow, navigate the omnichannel payment landscape and incorporate the security protocols that can keep your business, your vendors and your customers’ data secure.

Some of the above information has been obtained from external sources deemed to be reliable, but we do not guarantee their accuracy or completeness.


Related Services

Merchant Services


Weekly insights on the economic issues that matter most to your business.



Find out how we can help your business.

Contact Us


Copyright © 2018 JPMorgan Chase & Co. All rights reserved.