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

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!

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