mWallets: Are These The Future Of Payments?
Mobile wallets (mWallets): A convenient mobile future, or just another payment method?
Not so long ago, consumers and merchants only had a few ways to buy and sell goods and services. Card, cash or cheque. A lot can change in ten years. Cheques are rare, cash is less common, and there are numerous other ways to conduct transactions. Mobile wallets (mWallets) are amongst the latest wave of innovation in the payments sector that has the potential to transform how we use and transfer money.
A Business Insider report on the sector estimates that mobile payments volume will increase from $75 billion in 2016 to $503bn in 2020. Representing a compound annual growth rate (CAGR) of 80%; although the report does not state what percentage of that is through mWallets, compared to payments through other digital methods using a smartphone.
Slow early adoption?
So far, mWallet adoption rates have not been spectacular. In the US, the most popular mWallet service is Apple Pay. Figures for the first half of 2016 show that only 23.8% of US users had tried the service. When Apple Pay reached the UK, it was promoted as a service that would turn iPhones into contactless bank cards. Android (Google), Samsung and a host of others got into the UK market shortly afterwards.
Despite numerous articles and TV mentions promoting each launch, there has been limited fanfare or media attention since. Industry analysts note that the silence speaks volumes. Gilles Ubagas, a senior financial services technology analyst at Ovum, told The Memo that “Normally if numbers are decent in any way, most payment providers and issuers are very quick to trumpet them.”
More people are aware of these payment options. Signs alerting customers to the fact they can use Apple, Android, Samsung and others are appearing everywhere, especially where younger generations shop, but this does not mean adoption rates are increasing.
Will this turnaround in 2017?
Assuming technology giants, payment providers and banks haven’t given up on the concept, then we have to expect a renewed push to increase mWallet adoption in 2017. One currently underused channel is apps and m-Commerce stores.
Encourage customers to sign up and pay using an mWallet (instead of credit or debit card) for in-app and m-Commerce purchases and adoption rates should increase. If retailers and mobile developers can be incentivised to integrate the technology, then customers could be encouraged with discount codes and user-experiences that make using an mWallet easier than other methods. Not only that, mWallet is a convenient substitute for a contactless credit or debit card since most new phones are equipped with Near Field Communication (NFC) technology.
According to a survey conducted towards the end of 2016, nearly “70% of internet users ages 18 to 34 had used a mobile wallet.” Loyalty rewards, coupons and making payments were the three most popular uses of mobile wallets, with these acting as the gateway services for mWallet adoption.
We expect more e-commerce retailers and developers to encourage customers to pay using mWallets this year, which could result in wider use across the retail sector.
If you would like to discuss this in more detail and how you can optimise your payments for mWallets please contact our team. Call +44(0)808 159 3453 or email [email protected]