Black Friday in-store mobile wallet usage was low (AAPL, PYPL)
Black Friday shopping data shows that mobile wallets appear to be just a small fraction of all in-store payments, though their role is growing on a yearly basis, according to data from payment processor Cayan reported on by Fortune.
In-store mobile payments on Black Friday represented just 0.6% of sales, according to Cayan, though that's a 100% increase in usage year-over-year (YoY). Though this data represents a low portion of the total in-store payments made every year, it's still significant because Black Friday's massive volume positions it as a benchmark for consumer payment trends overall.
Even if the Black Friday figures underestimate usage, it's clear that mobile wallet adoption remains slow-going.
- The news of slow adoption has been a growing theme for mobile wallets. Major mobile wallet Apple Pay has seen decreasing popularity in the last year, according to PYMNTS and InfoScout. In October, only 23% of consumers in October reported having tried Apple Pay — a figure that's remained relatively stagnant since March 2016.
- And in-store mobile payments don't seem to be catching on the way m-commerce is starting to. Though conversion rates remain low, PayPal had nearly a third of its e-commerce volume come through mobile devices on the holiday weekend, and Adobe saw 45% of site visits and 25% of sales via smartphone. This is an indication that consumers are embracing mobile purchasing, just not in-store.
Companies will have to work towards solving major pain points in order to accelerate adoption of these products.Right now, consumers don't have a tremendous amount of incentive to adopt the payment method, since other payments seem to be equally convenient. For example, 19% of customers that don't use Apple Pay forgot to use the payment method, 14% wanted to use cash, and 13% simply wanted to avoid mobile payments. That means firms will have to work to find incentives to get these customers to turn to mobile payments.
Apple Pay and other wallets could increase adoption and usage by modeling some of Samsung's offerings, like its rewards program that gives users specific incentives to use the mobile wallet on a regular basis. That might bring nonusers to the product, considering that 44% of likely US mobile wallet adopters would test the service if given access to a wallet-specific rewards program.
Mobile payments are becoming more popular, but they still face some high barriers, such as consumers' continued loyalty to traditional payment methods and fragmented acceptance among merchants. But as loyalty programs are integrated and more consumers rely on their mobile wallets for other features like in-app payments, adoption and usage will surge over the next few years.
BI Intelligence, Business Insider's premium research service, has compiled a detailed report on mobile payments that forecasts the growth of in-store mobile payments in the U.S., analyzes the performance of major mobile wallets like Apple Pay, Android Pay, and Samsung Pay, and addresses the barriers holding mobile payments back as well as the benefits that will propel adoption.
Here are some key takeaways from the report:
- In our latest US in-store mobile payments forecast, we find that volume will reach $75 billion this year. We expect volume to pick up significantly by 2020, reaching $503 billion. This reflects a compound annual growth rate (CAGR) of 80% between 2015 and 2020.
- Consumer interest is the primary barrier to mobile payments adoption. Surveys indicate that the issue is less the mobile wallet itself and more that people remain loyal to traditional payment methods and show little enthusiasm for picking up new habits.
- Integrated loyalty programs and other add-on features will be key to mobile wallets taking off. Consumers are showing interest in wallets with integrated loyalty programs. Other potential add-ons, like in-app, in-browser, and P2P payments, will also start fueling adoption. This strategy has been proved successful in China with platforms like WeChat and Alipay.
In full, the report:
- Forecasts the growth of US in-store mobile payments volume and users through 2020.
- Measures mobile wallet user engagement by forecasting mobile payments' share of their annual retail spending.
- Reviews the performance of major mobile wallets like Apple Pay and Samsung Pay.
- Addresses the key barriers that are preventing mobile in-store payments from taking off.
- Identifies the growth drivers that will ultimately carve a path for mainstream adoption.
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