Mobile payment adoption continues to rank among the most-discussed topics in the retail, hospitality, and payment industries. Statistics indicate that the future of mobile payments is bright, even if adoption is occurring at a slow pace. For example, according to a Gallup poll conducted in 2015, 13 percent of Americans had a mobile wallet, such as Apple Pay, Android Pay, or Samsung Pay, on their smartphones. An Accenture study revealed that although 52 percent of North American consumers are “extremely aware” of mobile payments, just 18 percent make them regularly.
However, the popularity of mobile payments is expected to increase sharply over the next few years; Javelin Strategy & Research forecasts that mobile wallet transactions will total $54 billion in 2019, up from $7.3 billion in 2015. Similarly, eMarketer recently projected that mobile payment transactions will increase by 210 percent this year over last, from $8.71 billion to $27.05 billion. There are several indicators that mobile payments have room to grow, and that should drive the future of mobile payments as a whole.
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Security
Among mobile payment methods, contactless payments seem to have the greatest potential for growth. Contactless payments most commonly use near field communication (NFC) technology to facilitate transactions. NFC payments through mobile wallets such as Apple Pay, Android Pay and Samsung Pay are highly secure — under the right circumstances they are more secure than using a payment card. Contactless payment devices and readers contain secure microprocessors and memory and interact with each other only at very short ranges (less than two to four inches), so consumers must deliberately initiate payment transactions. Users must unlock their smartphones or enter a password to make a payment. If a phone is lost or stolen, activity on the card can be frozen. In addition, top mobile wallets tokenize payment card information, so it’s never available in a readable format.
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Convenience
Growth is also predicted for the future of mobile payments because these transactions are quick. Many consumers aren’t willing to spend even an extra few seconds to complete payment transactions. The opportunity to save time by making a contactless payment or pulling out a smartphone rather than rifling through wallets for cash or credit card has great appeal.
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Loyalty
In addition to consumers’ payment information, digital wallets can store loyalty program information. This makes it easy and convenient for consumers to redeem points and other offers at the point of sale (POS). At the same time, special offers linked to loyalty programs can be conveyed to consumers using these mobile payment apps.
Studies and statistics show that the future of mobile payments depends heavily on the loyalty factor. According to a white paper by Euromonitor, mobile-driven loyalty may be the factor with the greatest potential to drive consumer adoption because it makes it easier for merchants to meet demand among customers for targeted, personalized offers.
A survey by the Yankee Group supports this prediction: 61 percent of respondents to the survey said receiving discounted offers on products and services would be “highly important” in persuading them to pay with mobile wallets, 53 percent of participants in the survey said receiving loyalty points on a linked mobile account would be a significant incentive to use a mobile payment method.
The customer experience you provide at the checkout is the last impression you leave on your customers about your brand. Enabling them to use their preferred payment method is a vital step in making that experience a positive one. Make sure you can provide your customers with the option to use mobile payments, as more consumers discover the security, convenience, and loyalty-related appeal of mobile payment methods.
