The mobile payments space is sometimes a little bit hard to figure out, but Android Pay made a big splash in the past few weeks. The service now works in 13 more banks, including BoFA, USAA, Discover and more. What does all this mean for the mobile payments industry? But wait, actually, let’s start a little more basic for those that have only experienced Apple Pay, Venmo, or PayPal.
Google Wallet, which you may remember -- which still powers web-based Google Play purchases and some GMail money exchange -- was released in 2011. At I/O 2015 (a Google developer conference), the company released Android Pay. It’s a digital wallet using near field communication technology (NFC), which has become more commonplace in recent years.
Mobile payment adoption got off to somewhat of a slow start. Android Pay had the lowest usage -- 1.1% -- of the major players in the space, and that number had been consistent for about 18 months. Apple Pay is only slightly higher (4.0%) with Samsung Pay leading the pack at 4.5% of users with the functionality to do mobile payments.
Increasingly people in surveys report being happier with their current payment options -- i.e. credit, debit, cash -- and that remains the biggest roadblock to further adoption of mobile payment. It should be noted some countries are currently exploring completely cashless contexts, although that’s not likely to arrive in the U.S. anytime soon. (Fun fact from that article about why the $20 is so common: since the dollar is accepted in corrupt oligarchies, it’s important to realize $1 million in $20s can be carried easily in a duffel bag -- but $1 million in $10s weighs 220 pounds. You now know something about mobile payments and getting away from crime scenes!)
The aggressive run of Android Pay partnerships should increase its share from 1.1%, but whether it will onboard completely new users into mobile payments remains to be seen.
In 2019, mobile payment transactions should surpass $1 trillion. That’s in the U.S. -- in China, mobile payments already have surpassed $1 trillion, with Ogilvy and Mather doing a report with Ipsos and claiming Chinese mobile payments have “changed basic, everyday life.”
In 2019, US mobile payment transactions should surpass $1 trillion. Click to tweet!
For similar adoption in the U.S., as PWC has noted, mobile payment solutions need to offer some kind of compelling user experience. It’s not that complicated to take out a debit card and swipe it at the supermarket, so what can a mobile wallet offer? It needs to offer either increased ease of use or some reward system. That might be the key for brands looking to do more with mobile wallets. If mobile wallets could be used to mine for significant customer analytics, and those analytics could be turned into a merchant-funded rewards program -- maybe tied with a geolocation resource to ping users about rewards when they enter an area -- that might drive adoption in the U.S. In essence, people want to see value.
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A fair number of users aren't seeing it yet. One recent study showed 18% don’t know what mobile wallets are, 15% can’t see a legitimate use for them, and another 15% added “no one I know is using one.” That’s nearly half the respondents with no context or clarity on what it is, so there’s work to be done.
Android Pay’s partnership strategy will be beneficial in attracting some new users -- at the end of 2015, only 7% of Android users had ever used Android Pay -- but the entire mobile payments space has work to do around defining their value, user experience, and alleviating security concerns. But as e-commerce continues to grow, so will the desire for streamlined, mobile wallet solutions like Android Pay.
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