An increasing number of brands and consumers are adopting mobile payments, but just as many are unconvinced. The Federal Reserve reports, those reluctant to make the switch don’t see the benefit (61%) or believe it’s easier to work with old-fashioned cash and credit (76%). Yet mobile payments are more than here to stay. A look at the data may help convince brands to see the benefits of adopting mobile payment. The performance results from early adopters are conclusive: adoption of mobile payments increases sales. As has been long observed with credit cards, switching away from cash and to technology causes consumers to spend 12% to 18% more. McDonalds, for example, reports that credit card purchases average $7, compared to the $4.50 average for cash. Mobile payments are the next logical step in credit-based purchasing as they further reduce the friction at pay points and can help to drive a better customer experience that fosters brand loyalty. According to Forrester Research, the growth in the mobile payment market is expected to continue and is projected to reach over $142 billion by 2019. Those brands which adopt now are more likely to earn a larger share of this market and garner more customer loyalty.
Mobile payments can be made using a mobile wallet, such as Apple Pay, Samsung Pay, or Google Wallet. These multi-purpose mobile wallets can digitize everything which is already in the consumer’s wallet, such as coupons, credit cards, gift cards, and even event tickets and boarding passes.
Accepting payments from multi-purpose mobile wallets is sufficient for many brands. They are easier to adopt (there is no need to build a specialized app) and the mobile wallet provider will provide assistance in set-up and troubleshooting. The effect of integrating with these mobile wallet providers can be increased sales and decreased waiting time at the point of purchase.
Some companies, however, will benefit from creating mobile wallets unique to their brand. Starbucks has done this efficiently with over 20% of their revenue deriving from their app, according to BI Intelligence. The app has high usage because it incorporates mobile order, mobile pay, and loyalty. Starbuck’s isn’t alone, companies like McDonalds, Dunkin’ Donuts, CVS, and Panera Bread have also been successful with branded mobile wallets. Branded mobile wallets, like multi-purpose ones, combine coupons, loyalty cards, and gift cards. They also make and track purchases, hold account balances, and provide information about prices, special officers and reviews. Additionally, customized mobile wallets provide push notifications at specified locations and times that help increase both sales and brand awareness.
The use of mobile payments through general or brand specific wallets has been steadily increasing since 2013. In 2017 it is predicted mobile payment will account for $62.49 billion and this number is expected to grow. Brands offering goods and services to Millennials and GenXers are most likely to benefit by integrating with a general mobile wallet, and those with loyalty programs and frequent repeat customers should consider developing their own.