The state of mobile payments going into 2019 and beyond

It’s no secret that smartphones pay a huge role in the customer journey, right down to the physical store experience. People research the items in their hand and compare prices and smartphones ultimately influence 56 cents of every dollar spent in brick-and-mortar stores, according to Deloitte Digital research. And as mobile payments become increasingly commonplace, more of those dollars will be spent on the phones themselves.

Around the world, 36% of smartphone users currently make mobile payments, though that number is heavily inflated by China, where it’s common to use WeChat for everything, and India. Without those two countries, that number goes down to 16.6%, but it’s growing.

The growth of proximity mobile payments

Proximity mobile payments refer to those made with the assistance of technology such as near field communication, QR codes or Bluetooth. Adoption has been relatively slow for a few reasons, namely inconsistency in point of sale systems and security. Two years ago, 67% of respondents in a Federal Reserve study admitted to being concerned about the safety of mobile payments.

However, while adoption has been slow, it’s also been somewhat steady. According to eMarketer, 20.2% of Americans made a proximity mobile payment this year, whether through scanning, tapping, swiping or checking in. That percentage translates to 55 million people, a number the company forecasts will grow by 39.2% within the next year.

Apple Pay and Google Pay are two of the biggest players in proximity mobile payments. When the former launched in 2014, 3% of U.S. retail stores accepted it; now, half do.

Combining loyalty and mobile payments

Notice I said “two of the biggest players.” The most popular mobile wallet is actually the one in Starbucks’ app. More than 23 million people pay for their coffee with apps, versus 22 million who use Apple Pay.

One thing Starbucks does that Apple and Google don’t is incentivize consumers to use its app rather than cash. The coffee giant’s mobile wallet and loyalty program are rolled into one entity. With the Starbucks app, consumers can order ahead and skip the line, and collect points for each purchase. Dunkin’ Donuts’ DD Perks works similarly; pay in-app and earn free coffees on a regular basis.

These apps facilitate seamless transactions, which drive loyalty and repeat visits. For example, Business Insider reported that 66% of shoppers who use Walmart Pay, which is also on track to surpass Apple and Google in users, end up using the service again within three weeks.

The (possible) Amazon impact

With legacy brands such shuttering stores left and right, Sailthru (full disclosure: my employer) surveyed more than 2,000 consumers in the U.S. and the U.K. about their attitudes toward brick-and-mortar retail. While far more people reported greater satisfaction shopping in-store, many answers conveyed indifference. Respondents didn’t particularly miss Toys “R” Us or Sears. When asked which online retailers should open physical stores, most people in the U.K. answered “none.”

However, it was a very different story stateside. Forty percent of American consumers answered Amazon, which pledged to open 3,000 more locations over the next three years. Amazon Go’s unique and futuristic set-up takes paying in-app to the next level. Consumers scan codes in-app as they walk through turnstiles. From there, a combination of deep learning algorithms, computer vision, and sensor fusion — or what Amazon refers to as “just walk out technology” — does everything automatically. People don’t even need to pull out their phones or wallets to pay.

it happens automatically as they leave the store. Given Amazon’s immense popularity, this could be a game changer, making far more people comfortable with mobile payments.

Security is also less likely to be an issue. According to Bain & Company, 65% of Prime members would be willing to bank with Amazon, underlining a deep sense of trust. What’s more, 37% of people who don’t even shop on Amazon are also open to banking with the ecommerce behemoth.

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