What the timely increase in U.S. mobile payments means for business

What the timely increase in U.S. mobile payments means for business

Growth in mobile payments

Mobile payments dominate commerce globally. Yet, mobile payments have only started to gain traction in the United States in the last few years.

The mainstreaming of mobile payments is underway, per a recent Economist report that also highlights how far behind the United States is compared to the rest of the world:

“30% of all consumer transactions in America are paid for in cash, over twice the Swedish rate. The average American also writes 38 cheques a year, nearly five times the number of the average Brit. And in China, where the credit-card industry has never taken off, the mobile-payments industry is more than 50 times the size of America’s.”

As a reason for the country’s delayed adoption of mobile payments, the Economist points to the proliferation of mobile payment options in America. This fragmentation has challenged mobile payment adoption, as consumers are overwhelmed with choices:

“One reason for this small size is the fragmentation of America’s payments systems. In China, for example, Alibaba and Tencent manage 92% of mobile transactions. America has 14,000 financial institutions and 16 payment processors running different systems.”

Looking ahead, the expected growth in mobile payments volume ranges from $282 billion by 2021 (the Economist) to $503 billion by 2020 (Business Insider).

This growth is across platforms, such as Venmo, which sent 80% more payments year-over-year in the first quarter of 2018, and Zelle, which processed 40% more payments in the trailing 12 months than in all of 2016.

Mobile payments are here to stay. So what does this mean for businesses?

Meeting consumer expectations for mobile payments

Speed is paramount when it comes to meeting consumer expectations for mobile payments. The friction currently experienced when pulling out a card to swipe or chip into a reader is something most consumers hate.

A swift checkout process is the core value proposition for mobile pay.

There are two technologies that make mobile payments possible: Near Field Communications, or NFC, which requires the consumer’s device to be nearly touching a terminal, and Bluetooth, which has a wider range that doesn’t require a device to be removed from a consumer’s pocket or purse.

With Bluetooth, there are some compelling use cases, especially when it comes to splitting payments for groups.

Imagine a group checkout experience at a restaurant: Bluetooth devices could connect to a Point-of-Sale terminal for each person to pay their share. This would revolutionize the way groups pay.

For card-not-present transactions, mobile pay offers even more advantages. A consumer no longer has to store a card with multiple merchants. This makes for a more secure payments experience overall.

The next era of mobile payments : Speed, security, and flexibility

As Pay By Group CEO Camilo Acosta notes, using vendors for integrating different payment methods offers the end user increased speed, security and flexibility:

“Mobile is all about the shortcuts. Users don’t want to re-add credit cards each time. With third-party vendors, consumers can just keep using the same card and not re-type it every time they need to pay. That convenience is paired with increased security. Cards aren’t stored across multiple merchants, which reduces the odds of card data being exposed in a security breach.”

A secure mobile experience matters, and businesses can rely on third-party partners for a secure and up-to-the-minute payment experience rather than build from scratch – and then maintain that payment experience through a shifting landscape. The ability to check out smoothly without having to insert card details can also make a difference for merchants. By integrating multiple mobile pay methods, merchants enjoy higher conversions and fewer cart abandonments.

Mobile payments have traditionally been extremely difficult to execute well. With so many different mobile pay brands, businesses have struggled to stay current with payment trends.

Takeaways

Optimizing the mobile experience for payments is extremely challenging. Here are quick tips for leveraging mobile payments:

  • Keep your messaging and call-to-actions simple. Only offer/request as much information as the consumer needs to move to the next step.
  • Make the consumer comfortable with a smart balance of convenience and security.
  • When it comes to non-traditional transactions, such as group payments, there is added complexity that must be addressed.

Consumers want payments to be simple, accurate, and easy-to-use. If your business can deliver those three things, while also providing a secure back-end to manage transactions, it will be well-positioned to enjoy the benefits of mobile payments!