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After 10 Years, What's Next For Digital Commerce?

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Have you noticed how difficult it is to go anywhere these days and not see people fixated in front of their smartphones? They are no longer being used just for emails and watching the latest viral video, mobile devices are now an integral part of our everyday lives and cultural fabric.

We may not see laptops go the way of the typewriter, but the dramatic growth of smartphone sales and usage in the last decade has forced other devices to adapt to new roles in our everyday lives. But there is even greater significance to what's happening. The smartphone is not only becoming our primary source for Internet use -- it's dramatically changing money, and how we transact.

What we're seeing today is a fundamental change in the evolution of money, driven by mobile that has -- and will continue to have -- major implications for retail and digital commerce. The opportunities for businesses to connect deeply with buyers will continue to increase, as consumers are now purchasing goods anytime and anywhere. But this wasn't always the case.

To put this in context, there are forces behind the rapid adoption of mobile payments which have moved us to the ubiquity of mobile today. For instance:

As we, at PayPal, mark our 10th anniversary in Canada, and the 10th anniversary of launching mobile payments services in the U.S. and Canada, it's worth considering how much has changed. When we were among the first to market mobile payments in 2006, it constituted less than 1 per cent of our global transactions. In 2015, that figure reached almost 30 per cent, with our mobile users across the world spending $66 billion through 1.4 billion mobile payment transactions.

Our shopping habits are changing and money is going mobile. Retailers of all sizes who want to succeed in the digital age must embrace this change.

So, what can we expect to see in mobile and e-commerce over the next decade? Here are a few ideas:

  • Money is digitizing. We firmly believe that in the next three to five years, we are going to see more change in the financial services industry than we have seen in the last 20 to 30. Physical money, whether that be cash, cheque or credit card, is digitizing right before our eyes. A couple of years ago, roughly 50 per cent of money being exchanged was in the form of either cash or cheques. Today, that number has dropped to 40 per cent and by the end of 2017, it's predicted to drop even further to 25 per cent. We are witnessing an obvious trend -- physical money is digitizing.
  • An increase in business-to-business (B2B) e-commerce where businesses are looking to sell their analytics, data, accounting, cloud computing platforms and expertise to other businesses.
  • A distinct rise of the shared economy with companies like Uber and Airbnb disrupting traditional industries like transportation and hospitality. Today, millions of people are buying, selling and exchanging goods and services in a peer-to-peer fashion on marketplaces from cars, bikes and garages to task-based services like contractors, cleaning or dog-walking.
  • Even more collaboration. We're seeing bigger brands and traditional financial services companies collaborate with emerging digital disrupters, startups and technology companies to offer digital services to their customers. The approach is more collaborative than combative.
  • There's also potential for "Contextual Commerce," which is about payments enabling the various digital experiences that consumers engage with during the course of their day. The act of shopping isn't something that consumes a huge part of a consumer's digital day. For example, you may only spend one per cent of your day shopping online, but you're constantly checking your email and your social media feeds or watching videos and playing games -- and that's when a retailer could target you with buy buttons.

But, what's most important over the next decade is for payments providers to work together to fulfill the need for a fair, safe, and inclusive financial network, that enables full participation of all people in our global economy. Canadians deserve choice in how they spend, manage, save and share their money without boundaries. For years, we've been talking about the power of e-commerce and mobile payments and we are now finally beginning to see the full potential that this industry can deliver.

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