By the end of 2017, there will be 3.4 billion smartphone handsets in use around the world capable of serving their owners as a digital alternative to a credit or debit card. All of which means we could be poised for a digital payments revolution and for lots of new incentives and rewards schemes focused on getting consumers to ditch their cards in favor of their phones.
However, just because a phone comes with a certain feature, there's no guarantee that its owner will ever use it. How many iPhone users can truly claim that they've launched its stocks app more than once?
Google has been trying to convince us that we should be using our smartphones instead of credit cards or cash since 2011, when it first demoed Google Wallet. But it took the launch of ApplePay in 2015 for the idea to start catching on.
According to Juniper Research, Apple's system had managed to attract 45 million regular users by the end of 2016, and by the end of this year, the research and consultancy firm forecasts the number will essentially double to 86 million.
However, Samsung and Android Pay are now starting to catch up. IHS Markit's latest data, published Thursday, suggests that 11% of those 3.4 billion payment-compatible devices will be of the ApplePay variety while 61% will be Android Pay ready. And now that the tech is at critical mass (in terms of access, at least) we could well start to see some heavy promotional activity.
"To reach these smartphones, Apple, Samsung and Android must strategically expand mobile payments services and build partnerships with banks and financial institutions," said Ruomeng Wang, Mobile & Telecoms Analyst at IHS Markit.
IHS believes that the key to establishing the phone as a wallet replacement will be to expand the number of potential benefits for consumers. Apple is already letting users pay for online goods and services via their handsets and the Safari desktop browser.
Yet Samsung and Google are taking things further with rewards schemes and special offers and this could be one of the dominant trends of the year.
"Adding entertainment elements into the reward programs, such as Android Christmas Cracker and Alipay's Red Envelope -- which emulates the Chinese tradition of sending money to family and friends during festivals -- differentiates mobile payments services by creating unique user experiences," said Wang.
Wang points to Samsung's heavy use of incentives when it lanched SamsungPay in the US. Thanks to offering users access to a rewards-based loyalty program, the number of users had doubled every week. "Mobile payments services can use reward programs to engage retailers, banks and customers, adding co-branding value in terms of marketing spend and brand recognition," he said.