Mobile payments volume in the US is expected to total $112 billion in 2016 and grow at 20 percent compound annual growth rate until it reaches $282 billion by 2021, according to a report from Forrester.

The report, Forrester’s Mobile Payments Forecast, looked at the volume of mobile payments being made in the US and where they are coming from, analyzing the causes and potential future of the industry. The results should reassure brands and retailers that have felt uneasy about the growth of mobile payments in recent months.

“Merchants who simply attempt to convert mobile moments into mobile payments moments will fail to reach the minimally viable customer experience for lasting adoption and use,” said Brendan Miller, analyst at Forrester and primary author of the report. “Conversely, those merchants who seamlessly embed the payment in the mobile moment itself will win with mobile payments.”

Mobile payment growth
When mobile payments first arrived on the scene in a big way with the arrival of Apple Pay, many thought for sure that this was the future of retail.

While other mobile payment services had technically existed before – PayPal being one example – Apple Pay was the first time many mainstream consumers had heard of the idea.

But since then, forecasts for mobile payments use have been iffy. Would this new technology really revolutionize retail or was it only a fad?

For a while, it seemed the definitive answer was “maybe.” Mobile payment is certainly popular but it did not sweep across the retail world the way many had hoped.

But a new report from Forrester has taken a closer look and found that mobile payment transactions are growing at a healthy rate and that the service remains quite popular for many consumers and is only increasing in popularity.

Forrester predicts that the current volume of mobile payments will triple by 2021, growing at a 20 percent annual compound growth rate each year.

Venmo is one of the most popular mobile payment solutions and makes up almost a quarter of current mobile payment transactions, while others such as Google Wallet and Square are also quite popular.

Forrester attributes this growth to an increase in merchant-integrated mobile payments and merchants partnering with third party payment apps such as PayPal and Samsung Pay.

“Combining speed and ease of use, NFC is on track to become a leading in-store mobile payment technology in the next several years,” Mr. Miller said. “US merchants are still busy installing new point-of-sale terminals to accept EMV chip cards and are simultaneously adding NFC acceptance capabilities, creating new scale for the mobile technology.

“Fifty percent of enterprise retailers surveyed have already implemented or plan to implement NFC by the end of 2016, and an additional 22% plan to implement it in 2017,” he said. “However, device implementation and presence do not automatically translate to consumer use and adoption.”

A smooth integration
What is important to remember when designing or integrating a mobile payment system is that consumers can already make purchases fairly easily just by using a regular debit or credit card.

Taking out a smartphone and scanning that to make a payment is not, by itself, fundamentally any easier than doing the same thing with a wallet.

So retailer have to make their mobile payment systems offer something to customer that they cannot get by using traditional purchasing patterns.

Companies that make strong use of mobile loyalty programs, where customers can upload their credit card data to an app and use that to both make purchases and earn rewards, have seen a lot of success.

For example, Starbucks recently revealed that 27 percent of all transactions last quarter came from mobile (see story).

Retailers have to be able to integrate payments in a smart and useful way into the natural retail process if they want to make the most of the current and future climate of mobile pay.

“The mobile payments experience of the future will let consumers check out seamlessly while providing additional benefits that they could not get by using their credit or debit card,” Mr. Miller said.