Why are Apple Pay, Starbucks' app, and Samsung Pay so much more successful than other wallet providers?
In the US, the in-store mobile wallet space is becoming increasingly crowded. Most customers have an option provided by their smartphone vendor, like Apple, Android, or Samsung Pay. But those are often supplemented by a myriad of options from other players, ranging from tech firms like PayPal, to banks and card issuers, to major retailers and restaurants.
With that proliferation of options, one would expect to see a surge in adoption. But that's not the case - though Business Insider Intelligence projects that US in-store mobile payments volume will quintuple in the next five years, usage is consistently lagging below expectations, with estimates for 2019 falling far below what we expected just two years ago.
As such, despite promising factors driving gains, including the normalization of NFC technology and improved incentive programs to encourage adoption and engagement, it's important for wallet providers and groups trying to break into the space to address the problems still holding mobile wallets back. These issues include customer satisfaction with current payment methods, limited repeat purchasing, and consumer confusion stemming from fragmentation. But several wallets, like Apple Pay, Starbucks' app, and Samsung Pay, are outperforming their peers, and by delving into why, firms can begin to develop best practices and see better results.
A new report from Business Insider Intelligence addresses how in-store mobile payments volume will grow through 2021, why that's below past expectations, and what successful cases can teach other players in the space. It also issues actionable recommendations that various providers can take to improve their performance and better compete.
Here are some of the key takeaways:
- US in-store mobile payments will advance steadily at a 40% compound annual growth rate (CAGR) to hit $128 billion in 2021. That's suppressed by major headwinds, though - this is the second year running that Business Insider Intelligence has halved its projected growth rate.
- To power ahead, US wallets should look at pockets of success. Banks, merchants, and tech providers could each benefit from implementing strategies that have worked for early leaders, including eliminating fragmentation, improving the purchase journey, and building repeat purchasing.
- Building multiple layers of value is key to getting ahead. Adding value to the user experience and making wallets as simple and frictionless as possible are critical to encouraging adoption and keeping consumers engaged.
In full, the report:
- Sizes the US in-store mobile payments market and examines growth drivers.
- Analyzes headwinds that have suppressed adoption.
- Identifies three strategic changes providers can make to improve their results.
- Evaluates pockets of success in the market.
- Provides actionable insights that providers can implement to improve results.