A Look Inside Mobile Payments in 2018 – Part II

Gift Card Merchandising - Gift Card Mall checkout

In Part I, we discussed the importance of gift cards as a mobile payments strategy. A majority (77%) of U.S. adults use smartphones, most of which are mobile wallet-capable. According to Forrester, the value of the mobile payments market is about $112 billion with Apple leading the way in terms of device-specific mobile wallets.[1] When it comes to overall success, Starbucks’ mobile app is leading the pack, surpassing Apple Pay and Google Pay in users, with more than 40% of the U.S.’ 55 million smartphone users having made an in-store payment through the app.[2]

Samsung Pay has also positioned itself as a market leader both through innovative POS payment technology and partnering with Visa to offer seamless and secure mobile experiences to over 350,000 Visa Checkout merchants. This joint venture into cashless commerce enables users to skip the username and password process and simply pay with the click of a button on mobile.

While several of these apps have seen great success, the truth is that the quest for mobile wallet dominance is still just starting. Mobile wallets are nascent and looking to hit a tipping point where both merchants and consumers go all-in. Consumers are looking to merchants to lead the way; however, many merchants are still looking for the right opportunity to expand mobile wallet offerings that will lead to the greatest ROI. Gift cards provide a bridge to increased adoption, more convenience for consumers, and decreased payment processing costs for merchants.

We can look to the data to provide perspective on this conundrum. Of the 195 million adults that are smartphone users, 84.8 million use Apple devices (33.5%).[3] Since its launch in 2014, Apple Pay—one of the leading mobile wallets—has also seen adoption increase from 3.8% to 12.8%.[4] In terms of reputation, Apple has the support of a large and loyal user base that has helped adoption rates and that will continue to expand Apple Pay’s popularity and use. For merchants, the key lies in finding the right technology to leverage the reach of Apple Pay and the convenience of gift cards to drive mobile adoption and see increasing ROI.

Apple Pay: The Intersection of Consumer Preferences & Technology

Apple Pay has become the standard for mobile wallet technology at the point-of-sale (POS), though it faces some long-standing competition when looking at web checkout. A recent survey by Boston Retail Partners notes that the amount of retailers that accept Apple Pay (36%) is almost on par with those that accept EMV cards (37%).[5] Most notably, that 36% represents a larger share of retailers than those that accept competitor Android Pay (24%) or PayPal (34%).[6] With online purchases, however, there is room to grow; in terms of ecommerce checkout, Apple Pay is accepted by 35% of ecommerce merchants, while PayPal is accepted by 64%.[7]

The truth is that consumers are ready for mobile payments both in-store and online, and merchants must be ready to adapt. Today’s youngest generations were raised with smartphones-in-hand, and mobile wallet apps are readily available and easy-to-use for any age group. The issues that plagued the adoption and rise of ecommerce (namely, lack of high-speed internet connections) are increasingly moot points in today’s high-speed era. The biggest obstacle to meeting consumer preferences lies in adding value to the mobile wallet experience, driving behavior in the direction of daily use. Today’s consumers are tech-savvy and accessible via mobile smartphones; it’s up to the merchants to find creative ways to add value to the overall experience and compel adoption and use.

[1] Wall Street Journal; The Cashless Society Has Arrived – Only It’s In China; January 2018

[2] recode. Starbucks’s mobile payments system is so popular in the U.S., it has more users than Apple’s or Google’s. May 2018.

[3] PYMNTS.com; Mobile Wallet Adoption. Where Are We Now?; 2018

[4] PYMNTS.com; Mobile Wallet Adoption. Where Are We Now?; 2018

[5] Boston Retail Partners Consulting; The Proliferation of Mobile Devices is Driving the Rapid Shift to Unified Commerce; 2017

[6] Boston Retail Partners Consulting; The Proliferation of Mobile Devices is Driving the Rapid Shift to Unified Commerce; 2017

[7] PaymentsSource. Apple Pay suffers as merchants get choosy about digital wallets. June 2018.