In the current payments marketplace, there seems to be quite a bit of innovation in the transactional arena. We’ve seen Samsung Pay being rolled out ahead of the Olympics and Facebook’s most recent strategy to convert users into buyers. But how much is hype vs. reality? Our research shows that consumers are still slow to adopt mobile payments in certain areas.
Today, the brightest opportunities for innovation in payment solutions are around online transactions becoming more mobile. Venmo* for example, PayPal’s fast growing peer-to-peer payment service, also incorporates elements of social media and plans to expand into consumer-to-business payments.
(*For those of us with a sarcastic side, check out Venmo’s latest ‘Unboxing’ spot, starring YouTube sneaker reviewer Brad Hall.)
On the flip side, payment solutions based around physically using devices at the point-of-sale to complete transactions are facing challenges with adoption. And those that are paying for physical goods with their mobile phones are not doing so regularly; of the 7% of consumers who have made a purchase using their mobile phones, the vast majority (74%) are only paying three or fewer times per month with their devices.
On-demand is in demand
It’s no secret that we now live in a highly accelerated culture where consumers expect goods and services to be available ‘on demand’. In turn, shopping channels have to be accessible anywhere, anytime. The connected consumers of the future will increasingly make online purchases via mobile, which is estimated to account for half of all e-commerce sales by 2020.
So how can brick and mortar retailers position themselves successfully for the future? Recent innovations toward blending the in-store and online relationship may offer a hint. The mobile shopping app Curbside, for example, is partnering with retailers such as Target and CVS to allow users to shop and pay from their phones, and then pick up purchases at local stores without having to get out of their cars.
From ‘cash-less’ to ‘card-less’?
Many consumers are also looking to free themselves from what they have to carry in their wallets, including cash and credit/debit cards. Our data shows that nearly 90% of consumers globally carry a mobile phone with them when they leave their home; in comparison only 69% carry a credit, debit, or charge card.
Clearly there are opportunities for other payment solutions. In fact, many banks are already tailoring services to this end – leading institutions like JP Morgan Chase and Wells Fargo are implementing new options for cardless cash access expecting consumers to at least have their phones on them, but not necessarily their cards.
Infrastructure is holding us back
Generally, consumers tend to look for infrastructures to be in place before adopting certain innovations. Understandably, mobile payments are a more massive undertaking that involves a good deal of collaboration among financial service companies, retailers, mobile device makers, phone carriers, apps, and more – but if the systems aren’t in place, how can we expect consumers to truly start adopting?
Though small, the appetite for mobile payment solutions is there, but adoption will still be more gradual in nature.
Consumers are seeking help to free themselves from cards and cash, and innovation through new payment methods is taking place within the consumer mindset of instantaneous access. Anticipate mobile solutions to continue gaining ground – though primarily more as another form of ‘online payment’ (through apps, etc.). Expect slower adoption around the physical usage of mobile devices to help consumers make transactions.
More opportunities for mobile payment systems will arise with a wider infrastructure put into place and with further innovations that blend consumers’ in-store and online relationships. Smart retailers and brands can leverage the fast growth of peer-to-peer payment systems such as Venmo to create the appropriate infrastructure within their business, but the wants and needs of consumers ultimately will be what drives adoption.
Most Recent Posts
- The future of FinTech goes far beyond mobile wallets
- 5 findings on people’s financial mindsets
- 4 ways financial services companies can better their omnichannel marketing
- In-vehicle payment systems: How manufacturers can get it right
- Putting the minimum in Minimum Viable Product (MVP): It’s about the experience!