Explore the Rise of Online and Mobile Payment Platforms and Their Implication for Online Entertainment Services
Abstract
Businesses have embraced technology in its various forms in a bid to remain competitive. Online and mobile payment platforms represent a key development in innovation technology that enables consumers to pay for goods and services easily and conveniently. The increase in the number of app and mobile wallet providers and associated products is a testament to the rising surge in the usage of online and mobile phone payment platforms. In particular, these payment platforms have increased the convenience and frequency with which consumers, especially the Millennials, can access and pay for paid-for online entertainment services such as YouTube TV and video-on-demand. The gaming industry, movie theatres, and betting companies have also adopted mobile payments and such online modes of payment as PayPal to enable consumers to access their services fast and efficiently. However, content providers and app developers need to cooperate in developing additional security features for online and mobile phone payment platforms.
Introduction
Technology and innovation have totally transformed how firms today conduct business. Businesses are striving to continually enhance customer experience through the adoption of secure and more convenient modes of paying for goods and services consumed (Phair, 2016). In this case, online and mobile payment platforms have provided the much-needed answer. Consequently, this has seen people abandon conventional modes of payment such as cash, cheque, or credit cards. Consumers around the world are now using online and mobile banking platforms to pay for various entertainment services, including, downloadable games, live video streaming, video rentals, and paid TV, such as YouTube TV (Jones, 2017). This essay endeavours to examine the rise of online and mobile payment platforms, along with their implications for online entertainment services.
Findings and Analysis
Online payment platform refers to various products developed to enable buyers to pay for goods and services purchased through e-commerce (electronic commerce) using the internet (Qin, 2010). Qin notes that online payment platform has been designed "on the basis of paying means, such as credit card, e-check, digital cash, and intelligent card" (2010, p. 123). This mode of payment has found wide application among businessmen, customers, and banks. According to the Federal Reserve survey, mobile banking can be defined as “using a mobile phone to access your bank account, credit card account, or other financial account” (n.p.). In this case, mobile banking can be accomplished via an application that the user downloads on their mobile phone. On the other hand, it could also be achieved by the user gaining access to the web page of his/her bank via a web browser on his/her mobile phone. On the other hand, mobile payment, according to the Federal Reserve survey could be defined as “purchases, bill payments, charitable donations, payments to another person, or any other payments made using a mobile phone” (n.p.).
Uptake of online and mobile payment service
Over the past decade, there has been a considerable rise in the use and popularity of mobile and online payment as businesses turn to the use of cashless modes of payment to enable their consumers to pay for goods and services securely and conveniently. To realise this objective, businesses have developed various payment platforms for both mobile banking and online payment. IDATE (2013) estimated that by 2014, the volume of NFC transactions would be at 4.6 billion EUR but by 2018, this figure would have increased significantly to reach 53.8 billion EUR. On the other hand, figures released by a study conducted by Paybefore (2017) show that by 2020, mobile payments shall have hit the 410.5 Billion mark. This figure is inclusive of mobile retail payments at the POS (point of sale) as well as those completed online. The study, conducted in the United States, reveals that mobile wallets (M-wallets) will flood the market in the next few years, with the app and mobile wallet providers seeking to concentrate on mobile online payments as opposed to proximity payments that happen at the POS.
According to Gardiner (2017), mobile devices account for over a third of all online transactions globally. This is a clear indication that consumers prefer their mobile phones as the tool to help them make online payments. This development of event is mainly driven by the increased uptake of mobile payment services in Asia, where smartphones are now the most popular devices for facilitating retail payments, having overtaken tablets (Gardiner, 2017). A study conducted by Adyen Mobile Payments Index in the fourth quarter of 2015 revealed that mobile devices accounted for 34 percent of all online transactions globally, relative to the 30 percent reported the previous quarter (Gardiner, 2016). This increase in the use of mobile payment was mainly driven by the Asian market and in particular, by such payment providers in the region as UnionPay, JCB, and Alipay. According to Gardiner (2016), JCB recorded 54 percent in the share of mobile payments, compared to 47 percent the previous quarter, followed by Alipay with 44 percent relative to the 35 percent reported the previous quarter. On the other hand, UnionPay registered a 31 percent share of online payment, up from 23 percent. In Europe, the UK reported the largest rise in the adoption of mobile payment. In this case, 49 percent of online transactions in the UK were conducted via mobile phones, compared to 46.9 percent conducted the previous quarter.
Visa Europe (2016) reports that since 2015, there has been a three-fold increase in the number of individuals using mobile payments regularly, from 18 percent to 54 percent. From its report, Visa Europe (2016) shows that nearly three-quarters (74 percent) of UK consumers are 'Mobile Payment users'. The report has also categorised Britons in terms of their demographics in the use of mobile payments. For example, 55-64-year-olds have been categorised as the fastest-growing market in terms of adopting mobile banking.
Online entertainment services
There has been a tremendous increase in the demand for online entertainment services globally. This is largely the case owing to a rise in the number of devices that support digital media, enhanced internet speed, and ease of payment for paid content, chiefly through mobile payment and online payment platforms. The rise of such digital media players as Amazon, Netflix, Apple TV, Boxee, and Hulu, among others, has brought about a major transformation in the global entertainment industry and hence poses a key challenge to the supremacy hitherto enjoyed by the mainstream media. In particular, mobile devices have been a key driving force for the significant growth in global digital consumption in the past few years. This is largely the case due to consumer preferences for mobile devices as their preferred platform for accessing and consuming online entertainment. In particular, the global smartphone market has had phenomenal growth over the past few years, at a CARG (compound annual growth rate) of 17%, relative to a 9.5% growth rate recorded in the ass market for mobile devices. By 2014, there were more than 2 billion smartphones in use globally, with projections showing that this figure shall have more than doubled to 4.6 billion by 2019. Owing to the increase in mobile devices, this will enable consumers globally to have easy access to video content and music.
A 2017 report by Deloitte on the global outlook of the media and entertainment industry shows a sharp rise in paid-for content, especially video-on-demand. Consequently, distributors have been compelled to develop various ways to package and disseminate content as demanded by consumers. This has in turn led to the emergence of new revenue models, not to mention that the move has resulted in the opening up of various opportunities geared towards facilitating content creation (Deloitte, 2017). The report further singles out the Millennials as a prime market for online entertainment services, noting that this group of consumer spend more time on their mobile devices streaming content in comparison with the time spent for example, watching television. Accordingly, there has been a rapid growth in streaming services. For example, in 2015, there were 181 million video-on-demand viewers in the United States, but by 2021, this figure is projected to have hit the 209 million mark (Deloitte, 2017). A study by Price Waterhouse Coopers (PWC) reveals that the future of home entertainment belongs to digital streaming and downloading (Gantman, 2014). The study has forecasted a double increase in revenue from the U.S. electronic home video from $ 8.5 billion in 2014 to more than $ 17 billion in 2018.
According to Straubhaar, LaRose and Davenport (2016), "The sharing of music files on the internet introduced millions of people to the concept of getting their entertainment through the internet, for free." (p. 271). This practice is now no longer confined to sharing of music but has since spread to include video, print, and video games. While there has been increased sharing of online content by commercial enterprises, it is important to note that much of this content is no longer free. While file sharing has prevailed, the main question now has been how consumers will pay for online content, as opposed to if. Thank fully, pay entertainment services have now started to dominate the online entertainment industry. The trend was spearheaded by Apple with its iTune model, which demands that the users pay for the purchase of videos and music, but with a limitation on the number of times they can resell the product or make copies (Straubhaar et al., 2016). A good example of this model is Netflix, which is characterised by the production of own original content and enjoys a subscriber base that is more than what the popular pay cable channels have.
Companies in the entertainment industry such as movie theatres, the gaming industry, and betting companies have adopted online payment platforms where consumers can pay for their services online, thereby preventing disappointment of customers and waiting time (Suki, 2016). Rampton (2016) reports that online and mobile payment platforms will spur growth in the consumption of online entertainment because they are more secure, fast, and easy-to-use compared to traditional payment methods. Mobile payment platforms now come with fingerprint ID and encryption as a means of improving level of security. In recent years, such companies as Google, Samsung and Apple have developed their own mobile payment platforms as an alternative to checks, cash, and plastic.
PayPal is one of the online payment platforms that have had a huge influence on how people consumer online entertainment services. In this case, PayPal acts as a means for customers to pay content owners for accessing their content. For instance, music and movie providers typically let consumers access a few minutes of a stream or video for free, before requesting them to pay in order to access the rest of the content (PayPal, 2017). PayPal’s technique which has been dubbed paywall by industry player, facilitate the sale of content online fast and efficiently, thanks in large part due to the presence of such online payment system like PayPal.
Conclusion and Recommendations
The rapid increase in the number of online and mobile payment platforms is largely attributed to advances in technology and increased innovations. In particular, the rapid uptake of smartphones and their associated features allows consumers to access, download and consume online entertainment services, including pay TV, YouTube TV, music, and video. The fact that online and mobile payment platforms like PayPal are fast, secure, and easy to use, has led to their popularity over traditional modes of payments. However, some people are still sceptical about using these payment platforms owing to increasing cases of hacking. For this reason, service providers should liaise with app developers in order to add security features to both online and mobile phone payment platforms, such as the inclusion of double encryption services.
References
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