FROM THE INDUSTRY
The cost side tightens
This shock is external, but the effects are internal and already visible.
As consumers buy less or buy cheaper and high-frequency, low-value transactions dominate, the buy-now-pay-later models are at risk, especially when credit conditions tighten and defaults may rise. For MEF members in payments and APIs, the message is clear; volume will not disappear, but margins will. Refocused investment Higher interest rates change behaviour fast. Small rises can lead to a reduction in appetite for risk, meaning projects are cut or delayed and CAPEX is reviewed. Telcos are starting to slow network expansion, especially capital-intensive rollouts. 5G will continue, but slower. There will be deeper consideration regarding the territories used for rollout and partnerships will become more likely. For example, infrastructure partnerships will increase, there will be network sharing, more tower deals and an uptick in joint ventures. For mid-sized players, access to capital becomes a key constraint as private funding tightens while simultaneously public markets demand profitability. We will move into an era of more disciplined investment decision making; investments with clear returns, short horizons and measurable gains. Mobile payments are still the backbone of the mobile ecosystem. Wallets such as Apple Pay are continuing to grow in reach, but the value per transaction is coming under pressure.
While consumer spending shifts, costs are also rising.
War in the Middle East has pushed energy prices higher and markets expect inflation to stay elevated, with interest rates likely to remain higher for longer. Reports from Reuters, Bloomberg and the Financial Times all suggest that we are looking at tighter conditions, weaker growth, persistent uncertainty. For the mobile ecosystem, this is not a single shock but rather a series, one on top of another: energy, inflation, rates, and a reduction in the availability of semiconductors. The consumer shifts first Every crisis starts with the consumer; disposable income falls, credit tightens, in turn confidence drops, and ultimately spending changes shape. However MEF data is showing a paradox; while mobile is stronger than ever, activity is weakening. The number of consumers using smartphones to make payments has surged. From 82% of the user base to 92% over the past three survey waves of MEF’s Annual Consumer Survey. Mobile remains the default channel, but beneath that growth, behaviour is changing and spending is slowing. Across 18 markets, mobile purchases of goods and services online declined between the 2025 and 2026 MEF Annual Consumer Survey. The drop was from 62% to 61% - this may seem small, but it is very broad. Thirteen markets show declines in at least one of the eight payment categories tracked by MEF. This matters more than the number suggests as it shows direction. Ticketing fell in 10 markets between the same survey waves. Entertainment was cut first as people choose to stay home. As disposable income dropped, online shopping fell in eight markets, and food delivery and in-store mobile payments fell in seven. Even resilient categories have softened: for example, subscriptions, apps, gaming and ride-hailing. This means that platforms like Netflix or Spotify are facing pressure on their premium tiers, and services like Uber are seeing reduced discretionary use. There is a clear pattern; consumers don’t leave mobile, however they do spend less inside it.
For the telcos, it is energy that hits first. This is because networks consume power. Towers, data centres and edge infrastructure are all exposed and higher energy prices feed directly into operating costs. So… costs go up. Then there is the impact of interest rates. As these rise, debt becomes expensive, refinancing tightens and inevitably investment decisions slow. For many within the mobile ecosystem, including MEF members, this might become the core problem; flattened revenues, rising costs, less available capital, and increasingly squeezed margins. The semiconductor constraint This cycle would be hard enough. But the mobile ecosystem also faces a supply constraint: memory. According to SK Group, one of the world’s top memory chip makers, the shortage may last until 2030. Demand currently exceeds supply by more than 20%, and therefore production is shifting towards AI memory, which means that less goes to consumer devices. Samsung Electronics, SK Hynix and Micron Technology, the other companies sitting at the core of the memory market, cannot close the memory gap quickly. Demand is driven by AI and led by players such as NVIDIA. This increases component prices, leading to more expensive smartphones and slower upgrade cycles. In turn consumers keep devices longer, hardware volumes soften and the entire ecosystem slows. This then feeds back into apps, services and payments. Slower device turnover means slower adoption of new features and a slowing of monetisation cycles. Payments are changing Mobile payments are still the backbone of the mobile ecosystem. Wallets such as Apple Pay are continuing to grow in reach, but the value per transaction is coming under pressure.
Volume 48 No.2 MAY 2026
75
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