Javelin’s first annual “POS 2013-2018 Forecast” report found that mobile POS proximity payments made up just 0.01 percent of total retail POS volume in 2012. However, by 2018, mobile POS payments will total 13 percent, or $5.4 billion, of overall POS purchases.

“Mobility will transform the retail POS environment in two ways – as a means for merchants and retailers to recreate the notion of point-of-sale, and as a conduit for new forms of payments beyond cash, credit and debit,” said Gene Signorini, vice president of mobile insights at Mobiquity, Wellesley, MA.

“In the first scenario, retailers have already begun re-thinking what check-out means – instead of customers forming lines at physical registers, sales associates can utilize mobile devices to check-out patrons on the sales floor,” he said. “The benefits are line-busting and creating a more immediate interaction with the customer in the retail store.

“The second impact will take longer, but will arrive in time. Early leaders such as Starbucks are already using mobile payments as a means to augment existing payment mechanisms.”

Mr. Signorini is not affiliated with Javelin and commented based on his experience in mobile.

Javelin was not able to comment by the press deadline.

Retailers embrace mobile payments
To date, mobile online retail payments have experienced a much greater adoption than mobile physical POS payments.

However, the growing popularity of digital services with consumers is fundamentally altering the nature of POS, forcing bricks-and-mortar retailers to embrace mobile proximity payments in order to remain competitive.

The overall retail POS market is significant, accounting for 93 percent of total U.S. retail dollar volume. Retail POS purchases totaled $3.98 trillion in 2012 and are expected to reach $4.2 trillion in 2018, according to Javelin.

Consumers want to be able to leverage the advanced features of mobile payments such as personalized, geotargeted offers, electronic receipts and loyalty functionality and are looking to retailers to offer more digital payment options to enhance their in-store shopping experience.

Javelin forecasts that over the next six years there will be an industry-wide push for mobile technology that will help mobile POS proximity payments have the highest compound annual growth rate over all other forms of payments methods over next five years.

The value of mobile
This year, mobile POS proximity payments will reach $0.7 billion, or .02 percent of total POS retail purchases. The growth rate will remain relatively slow for the next year or so and then start to take off in 2015.

In 2014, mobile POS proximity payments are forecasted to reach $0.9 billion, or .02 percent of total POS retail purchases. In 2015, mobile payments will reach .04 percent of all POS purchases for a total of $1.6 billion.

In 2016, the volume of mobile POS purchases will climb to $2.4 billion, or .06 percent. In 2017, it will reach $3.6 billion, or .09 percent of the total. By 2018 mobile POS will contribute to $5.4 billion, or 13 percent of overall POS purchases.

Other key findings include that prepaid card volume at the POS will surpass that of gift card by 2015 and that debit cards have overtaken cash to become the preferred payment option for Gen Y consumers.

The report is based on two online surveys of more than 6,000 consumers.

“Both the biggest challenge and biggest opportunity for retailers is the fact that mobile POS ultimately won’t be a stand-alone, but rather integrated with loyalty, couponing and offers and marketing and advertising,” Mr. Signorini said.

“Merchants must understand that the value of mobile extends beyond just the final completion of the transaction, and should instead be used as a mechanism to engage the consumer both before entering the store, and while they are in the act of shopping,” he said. “This will require greater thinking about the total customer journey from pre-purchase to payment.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York