Fast, reliable 5G all set to grow mobile payments market

November 14, 2019

Dheeraj (Raj) Soni

President – Payments

Next year will see a rapid expansion in the availability of 5G mobile network services which is likely to drive a parallel increase in mobile payments as more of us use smartphones and other mobile devices to make fast, convenient online purchases.

Some 5G networks are already live across Asia, Europe, the Americas and other parts of the world. Three South Korean telcos – SK Telecom, LG Uplus and Korea Telecom (KT) – first began offering services a year ago for example, while NTT DOCOMO launched beta services in Japan last month (September). In the UK and the US, 5G networks are now live from operators including Three, Vodafone, BT-owned EE, 02 (Telefonica), Verizon, Sprint and T-Mobile.

To date those 5G deployments have been rolled out on a limited basis, in most cases restricted to specific cities or urban areas like Tokyo, Vancouver and London and offered with support for specific 5G handsets from manufacturers including Samsung, Huawei, Xiaomi and Motorola.

The real surge of activity is set for 2020, when most telcos and mobile network operators (MNOs) around the world will start to launch 5G services that will grow to cover much larger areas and have a wider choice of handsets for customers, including a 5G-enabled Apple iPhone. The anticipated pace and scale of 5G implementation has led GSMA Intelligence to forecast there will be more than 50 5G networks active worldwide by 2021. Elsewhere smartphone manufacturer Ericsson predicts that by 2024, global 5G subscriptions will number 1.9bn and coverage extended to 65% of the world’s population – making it the fastest expansion of a new mobile network technology to date.

Many of the customers accessing those networks will inevitably use their 5G smartphones to purchase products and services, both digital and physical, because they enjoy the convenience of paying using the device they are most likely to always have at their side.

Superfast mobile bandwidth of up to 1Gbit/s, low single digit millisecond latency, greater signal reliability and the extended coverage that 5G provides compared to existing 4G networks will combine to significantly enhance mobile application performance and make those purchases easier and smoother to facilitate.

There should be less chance of online purchases being interrupted or failing due to a drop off in the mobile data signal for example (Google has estimated that 53% of mobile users abandon sites that take longer than three seconds to load). 5G also enables a new generation of media heavy mobile apps such as video on demand, live broadcasts, high definition multiplayer gaming, live auctions, interactive sales events, in-store augmented reality (AR)etc – which are likely to deliver new forms of in-app promotions and buying options via one-click advertising and embedded video product catalogues. Indeed 5G networks could translate into as much as US$12bn of additional mobile ecommerce revenue for retailers by 2021 according to forecasts from Adobe Digital Insights (ADI). Conversely Barclaycard research conducted in 2018 estimated that online retailers lose around US$23bn each year in abandoned digital shopping baskets.

5G networks will also connect a wide range of devices other than smartphones, tablets and laptops to the rapidly expanding Internet of Things (IoT) – including wearable devices like smartwatches, earphones, activity bands, virtual reality headsets, smart glasses – which can also support mobile payments. We may even be ordering and purchasing our shopping via the fridge or paying for parking and tolls through our internet connected cars. The benefit 5G brings is the ability to reliably connect the right device at exactly the right time in the ideal moment and precise location which encourages the customer to make an instant and convenient mobile payment.

Ultimately we can only imagine the mobile commerce and payment opportunities that 5G will help to generate based on our experiences of earlier 4G and 3G networks. The really exciting (and lucrative) use cases are likely to be those that e-commerce companies, retailers, app developers and service providers won’t be able to identify until 5G network and service provision really gets into full swing in 2020 and beyond.

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