There’s no way of getting around it: mobile payments are the future of payments. Even the major credit card companies have anticipated the global shift to mobile by introducing their own versions of these digital wallets, adding to a growing number of established mobile payment solutions like Apple Pay, PayPal, and others.
And yet, while the payment world is poised for a mobile revolution, consumers (especially those in the U.S.) have been slow to make the move. Additionally, merchants have been reluctant to accept these types of payments. So what’s the hold up, anyway?
It appears the cause of the delay is two-fold with both consumers and merchants partially accountable for the slower-than-expected switch to mobile.
Change is never easy for anyone to accept, and on the side of the consumer, it appears to be an understatement. A recent National Merchants Association blog entitled, “Growing Companies and the Growth of Mobile Payments,” highlighted American reluctance to adopt mobile payments in emerging markets, compared to their consumer counterparts in Europe and Asia. Much of that reluctance is due to the fact that mobile payments are relatively new, leading to a lack of trust in mobile payment technology and security. However, there is hope that U.S. consumers are slowly catching on as a few studies have recently showed a small but growing portion of them are now using mobile payments, the largest group being millennials.
Similar to consumers, merchants have moved rather lethargically when it comes to adopting mobile payments, and it’s especially obvious in their stores. According to an April PYMNTS article, “When mPOS (mobile point of sale) solutions started to roll out in retail locations about a decade ago, many predicted a futuristic utopia devoid of long lines and bulging wallets. But these days, that fantasy is still far from reality. Even retailers equipped with mPOS terminals opt not to accept mobile payment, and consumer adoption continues to lag.”
Interestingly enough, it’s been proven that merchants that accept mobile payments achieve faster growth than those that do not. Another recent PYMNTS article showed that a survey conducted for NTT DATA and Ingenica ePayments found that 43% of businesses with revenue growth of at least 11% each year have an app that supports purchases and payments. Contrarily, 32% of businesses that do not offer a payment app are growing at less than 11% each year. What’s more, among companies that have zero or negative profit growth, only 8% offer a payment app. Recent studies have also indicated that merchants who accept different payment types are not only more likely to have repeat customers but they enjoy increased loyalty from customers as well.
It should be assumed that smart merchants would be quick to offer their customers multiple payment options, like mobile, even though that hasn’t necessarily been the case. Furthermore, it has yet to be determined whether the lack of consumer use is contributing to lagging adoption of mPOS terminals in retail stores or if it’s simply a lack of merchant understanding about these systems and the changing landscape of payments in general that’s the real reason for the hold-up. Regardless of the underlying cause of the delay, mobile payments represent the future of transactions.
Will it take a revolution to turn the tide in favor of mobile payments? Most experts believe that mobile payments will continue to gain popularity as people become more familiar and comfortable with these systems. It’s only a matter of time before Americans embrace mobile payments as a safer, more convenient way to make purchases – like the rest of the world already has.