Are You Making the Most of Mobile Payments?
At this point, most of us have a smartphone in our pocket. In fact, you may even be reading this on your smartphone right now.
According to a consumer survey conducted by PYMNTS, smartphone penetration currently stands at 77% of all adults in the US. Of those, roughly 43.5% use an Apple device, while 52% are Android aficionados. But, while smartphone ownership is ubiquitous, smartphone-enabled payments have been much slower to catch on.
Apple’s mobile wallet tool, Apple Pay, debuted back in 2014. Now, five years later, only one in three iPhone owners here in the US have yet tried out the app. That’s just 13% of American smartphone owners as a whole.
Although mobile payments tech didn’t spread like wildfire here as they did in other markets like China, adoption is slowly catching on. The survey mentioned above also noted that 7% of all iPhone owners used Apple Pay to conduct the last transaction they made. This suggesting that a large portion of iPhone owners who eventually give the app a try will end up converting into regular users.
Although we’re still early in the consumer adoption process, it’s just a matter of time before consumers pick up mobile payments en masse. There’s a few why it’s in your interest to expand your payments options and get on the mobile payments bandwagon now.
Mobile Payments Present Opportunities to Engage Buyers
Mobile payments offer numerous benefits for your business. For example, this technology is a great way to cater to customers’ desire for convenience. In turn, you see boosts to you conversion and retention, making shopping cart abandonment less likely.
In a recent study, 42% of online shoppers said the variety of payment options available at checkout will influence their decision when deciding where to shop digitally. Plus, while the number of mobile payments devotees is still relatively small here in the US, accepting mobile platforms can broaden your appeal to international buyers.
Take China, for example. The country is a global epicenter of online retail, with a market valued at nearly $2 trillion in 2019. And, as mentioned before, Chinese consumers are big on mobile payments. eMarketer projects the number of mobile payments users in China will hit 577.4 million by the end of 2019. Many Chinese consumers don’t bother with payment cards at all, opting for platforms like WeChat Pay and Alipay instead.
A similar trend is underway in India, as well as other hot, fast-growing markets like Vietnam and The Philippines. If you can cater to consumer preferences in these various markets, you possess a clear advantage over other international sellers.
Not only that, but there are opportunities for potential integration with your existing or future loyalty program. Kohl’s, for example, integrated their program with Apple Pay, allowing customers to pay with their mobile device and rack up points at the same time. Other outlets like drugstores, restaurants, and even Coke vending machines, took similar steps.
Of course, this requires working through your processor, acquirer, and other service providers to make possible. But, some vendors are actually taking the first step there, recognizing mobile pay integration as a great way to add value to their services.
Most Important: Security
Appealing to customer convenience and opening to new markets are great reasons to embrace mobile payments. If there’s one key advantage to mobile wallets, though, it’s the security factor. In fact, it’s somewhat ironic that 43% of consumers believe mobile wallets are not secure. By any objective marker, these apps are far more secure than any other mainstream payment method.
First, mobile wallets like Apple Pay employ the same tokenization technology as an EMV chip-enabled card. As opposed to magnetic stripe cards in brick-and-mortar stores, or conventional card-not-present transactions online, a mobile wallet app doesn’t transfer any actual cardholder data. Instead, the app exchanges a token, which works like a placeholder for sensitive or valuable data. This gives bad actors much less opportunity to intercept and steal payment information.
Even more impressive is the mobile payment app’s reliance on two-factor authentication. This isn’t inherent to the app. But, in most cases, it’s a practical reality of using a mobile wallet.
Before authorizing a transaction, the customer will first need to unlock the device. This is usually achieved with either a passcode or a biometric scan like a fingerprint. Then, to authorize the payment itself, users must again verify their identities with a biometric scan. Compare that to a standard card-not-present transaction, in which the buyer simply enters their card information. Sure, tools like AVS or CVV verification can help pick our fraudsters, but some attacks will inevitably sneak through even the best antifraud defenses.
The combination of different verification techniques offered by mobile wallet technology translates to much greater payments security than any other method currently in wide use.
More in Store?
The future will bring additional opportunities for those who embrace mobile payments early-on. For example, integration with the recently-announced Apple Card could be a first step toward a revolution in payments.
For now, though, both businesses and consumers will enjoy substantial benefits from mobile payments adoption.