Two Years After Apple Pay, The Woes of Mobile Payment Use

by Sean Ogino |

Two Years After Apple Pay, The Woes of Mobile Payment Use

apple pay

Considering the ultra-ubiquitous nature of mobile phones and the ease that mobile payments bring, it was a wise decision by tech giants like Apple, Samsung, and Google to launch Apple Pay, Samsung Pay, and Android Pay, respectively. But now that we’re two years out from the launch of Apple Pay, what do marketers have to show for it? Many reports have directly pointed that mobile payments use is lukewarm.

A recent Accenture Survey noted that about 52 percent of Americans are aware of mobile payments, but only 18 percent use them. But the same report also suggests that millennials and higher-income households lead the pack, with 23% and 38% using contactless payments at least once a week, respectively. There are two main inferences that you can draw from these numbers. First, there is a huge gap between the awareness of the mobile pay and its acceptance. Second, the scenario is not all that gloomy. There are people who are convinced of the utility of mobile payments. But, certainly, they are not even half of the total number of smartphone users.

Clearly, there are a few concerns that are not allowing Americans to make their mobiles the de facto instruments for digital payments. But all marketers and retailers should put the task of weeding out all those concerns which are creating a wall between mobile payment and customers in the list of their top priorities. Sooner or later, all other payment modes are going to be eclipsed by mobile payments. Numbers rarely lie. According to a report from eMarketer, in 2015, $8.71 billion in mobile payments were made in the United States. It is about to surpass $27 billion in this year. Forrester further believes that the figure is expected to increase to $142 billion by the end of 2019. These staggering figures must have made you believe that how important mobile payments are going to become in the future and it’s important to eliminate all the apprehensions, which are as follows…

Missing Trust

The biggest pain point in the journey of adapting to mobile payment use is a lack of trust in such systems. Customers are extremely insecure about the security issues and with every single security breach, this insecurity gets multiplied. And that breach doesn’t have to be a financial breach. Even if customer’s email id gets misused, he becomes increasingly wary of such systems. And that’s understandable too. After all, you might have to give important information like credit card credentials while paying via mobile. Naturally, they will be reluctant to take a risk.

But this isn’t a problem without a concrete solution. There are ways to inculcate the sense of trust and security by taking some measures which are based on strong technological setup. Apple included the extra layer of security offered through Touch ID in Apple Pay. Apple also made it clear that Apple Pay is just a middleman. It is not seeing any of the transaction data flowing through the system at all. More and more efforts on the same line are needed to win the trust of customers.

Mobile Payment Use Lacks Motive

Just like there has to be a special reason why people should shop from you by ignoring others, there has to be a strong reason why people should use mobile phones to make payments. Frankly speaking, it’s very difficult to win in the business without any lucrative bait for the customers. It can be anything ranging from loyalty points or special offers at the PoS when making purchases for mobile payment users. In short, there has to be a clear value proposition. Mobile payments cannot remain as substitutes of credit cards.

Bryan Yeager, an analyst at eMarketer, points to Starbucks as a model for success in this regard. The coffee giant has incentivized mobile wallet use by giving special offers. Of course, it was easier for them as they already had a well-developed mobile app. They linked their loyalty program with mobile payments. Now, more than 20% of their in-store transactions in the US are from their mobile app.

We’ve written at length about the need to incentivize customers to use mobile wallets, and why marketers should be very motivated to do so–the amount of data that they can capture is potentially enormous.

Need To Move Beyond Payments

Though mobile payment use remains the key focus area when analysts discuss mobile wallets, the fact is that these tools are capable of more.  If you are limiting its use till the act of payment, you are failing to utilize the unquestionable potential that the tiny device called mobile offers.

You have to understand that any system yields respectable results when it operates in its wholeness, and when it is functioning at its full might. The mobile wallet is no exception.

It can be efficiently used to heighten the experiential value of the whole process of mobile check-out. And it’s easily achievable by doing small things…whether it’s the post-sale account creation, delivery alerts, or even receipts sent immediately to the consumer. It doesn’t just give solid motive to customers to use mobile payments, but it also opens up one more avenue where you can communicate with your customers and send them targeted content. It goes without saying that this will boost the customer relationship. Really, this point–what mobile payment use can do for the customer experience–needs to be stressed more.

Mobile Payment Infrastructure Takes Time To Evolve

Even though technology is moving at a rapid rate, the infrastructure that is needed to mount those technologies is not as brisk in speed. To support credit and debit cards with embedded chips, many American merchants have replaced older PoS terminals with new ones. These cards are based on the Europay, MasterCard, and Visa (EMV) global standard, and are more secure than magnetic-stripe cards.

Apart from the security, EMV terminals also support Near Field Communication (NFC) transactions. That’s why many American businesses are moving to EMV terminals. But the fact of the matter is the process of completion of NFC-capable terminals is extremely time-consuming. By default, that means it will also be years before proximity mobile payments take hold.

In A Nutshell

While mobile payment use hasn’t been exploding in the US right now, there’s a need to prepare for the future. Especially when we take a look at the worldwide market, things become much clearer. From 2015 to 2016, projections state that mobile payment use worldwide will have grown by a whopping 37.8%.

Beyond tech giants like Apple, Samsung, and Google having their own mobile wallet solutions, large retailers have also launched their own. We all know about Starbucks’ solution–which is built into their loyalty program–while Walmart Pay rolled out in May and CVS Pay came out in August.

With almost half of North Americans still using traditional cheques to make payments to other consumers, P2P payments remain poised for potentially strong growth.  That’s where the future of payment, loyalty, and engagement is!

Moving the Mobile Wallet Beyond Payments

Digital Wallet Marketing Opportunities

The moment the phrase mobile wallet falls on our ears, we most likely think of a payment solution. And it’s alright too, as so many people are using mobile wallets to complete the payment process. But apart from being a payment tool, mobile wallets can also be used as valuable frameworks in which loyalty programs can be embedded, and strategic marketing tools to help increase sellers’ bottom lines. These two purposes constitute the non-payment aspect of mobile wallets.

Why Mobile Wallet Non-Payment Functions are Vital

The reason why all marketers need to pay a close attention to non-payment is, despite eMarketer forecasting a huge growth in mobile payments in 2016, it is worth noting that the total value of those payments is still just 0.58% of the $4.65 trillion expected to be spent. Part of the reason behind this tiny share is that concerns about fraud also plague shoppers’ minds. However, the much larger obstacle is pure culture. Most consumers are just extremely accustomed to their current payment methods, and mobile wallet use needs to become clearly beneficial to them before they make a change.

One solution to this is greater convenience. Payments Source points out that “mobile payment adoption will begin to climb steeply when there is a digital model that does not require multiple wallets, additional swipes and extra pokes to make a payment.”

A more direct benefit in exchange for mobile wallet use is savings. There’s hardly any doubt about customers’ affection for loyalty programs. They absolutely love them.  But they don’t love carrying around a wad of plastic cards in their wallets. Thus, it’s not surprising to see that with loyalty cards stored on their phones, 69% of consumers indicated that they’d be more likely to use them. Also, if loyalty rewards/points are automatically updated and immediately visible on mobile wallet loyalty cards, 73% of consumers would be more likely to join the loyalty program in the first place. We’ve pointed out how attractive it’d be for Walmart to join their loyalty program with their Walmart Pay app, but it’s true for many other retailers too.

In short, the non-payment aspects of a mobile wallet can eliminate physical loyalty cards and coupons by enabling customers to store and retrieve loyalty cards, and even have them appear automatically based on location. It will not just boost the customer participation and engagement in the loyalty programs, but also the use of apps like Android Pay, Apple Pay, and Samsung Pay as well.

Factors to Consider Before You Jump on the MobileWallet Non-Payment Bandwagon

There is no business solution which falls in the category of one-size-fits-all. Non-payment mode is no exception. You need to understand multiple aspects to make sure that it yields positive results for you.

Age and Income

According to a new Urban Airship report, 67% of millennials have used mobile wallets in the last three months, compared to 51% of surveyed people who are 35 to 54 years old. 63% of respondents with household incomes greater than $60,000 have used mobile wallets in the same period, compared to 39% with household incomes below $60,000.

The aforementioned trend isn’t difficult to decipher. Young people are naturally programmed to adapt easily and swiftly. And higher income group is more prone to buy smartphones which are equipped with all the fundamentals which are required for non-payment functioning. So, while designing a loyalty program for mobile users, these numbers can act as an important insight.


As a loyalty marketer, you have to understand that the success of non-payment mode relies heavily on the ecosystem in which your customers will never forget a coupon, miss out on rewards, or fumble at the register. For your customers, it can be a persuasive and powerful reason to go all-in with mobile payments. There are enough examples where mobile loyalty initiatives have tanked because they don’t notify users about the expiry of the digital coupons, due to which discounts go unclaimed. After all, 67% of U.S. respondents and 58% of U.K. respondents are likely to visit a store if they receive coupon expiration reminders when they’re within proximity of the store’s location. Naturally, it will enhance your in-store traffic.

Apple Wallet has this expiration notification technology, and both it and Android Pay can run automatic alerts for coupons when customers are near a certain store or when the coupon is close to expiring. Judy Chan, senior product marketing manager at Urban Airship, notes another huge incentive for retailers to work with Apple, Android, or Samsung on mobile wallet technology: “Mobile wallets from the platforms enable you to broaden your reach to all customers with a smartphone…apps such as Apple Wallet and Android Pay come pre-installed on newer devices, and the barriers to getting someone to install a loyalty card or coupon are much, much lower than getting them to install your app.”


Mobile wallets can be a medium to develop a rapport with customers and earn their loyalty. You can devise messages for individual loyalty members when they reach new status levels or for special events like double/triple points days or birthday offers, or provide links on the back of the pass to exclusive content.

The above-mentioned tricks work because mobile messaging can be highly targeted. The above-and-beyond rewards strategy is a sure shot to be received by customers with open hearts. The reports show that 46% saying they expect these types of benefits.

Starbucks, the coffee giant, is a great example in this context. Though their mobile app allows people to pay, it also offers much more. My Starbucks Rewards is a well-devised methodology to track customer buying behavior. It also allows customers to modify their products according to demand, and gives customers the ability to monitor their progress in real time on the Starbucks app.

Starbucks' mobile wallet and loyalty app reflects customers' personal preferences and spending.
Starbucks’ mobile wallet and loyalty app reflects customers’ personal preferences and spending.

Starbucks is also always trying to save their customers’ time. The app comes with an option where customers can pay for drinks beforehand and schedule pick-ups in store. In short, they are not using loyalty programs just to retain customers; they are using them to serve people better as well.

The thoughtful marriage of loyalty programs and mobile wallets is a definite win-win scenario for marketers like you. It’s vital to think beyond the mobile wallet being only a payment tool. It can be much more than that…today, people want their loyalty cards, reward details and expiry notifications at their fingertips. And that’s where non-payment mode can act as a catalyst!

Walmart Pay: What It and Other Mobile Payment Options May Be Lacking

Walmart Pay

Walmart is joining the mobile payments game with, following behind the likes of Apple, Samsung, Google, Paypal, and even Starbucks. The new payment system, Walmart Pay is built into their mobile app, which already has 22 million active users, and gives consumers the ability to upload card information and pay for in-store purchases with the app. … Read more

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