Ecommerce continues to grow at a rapid pace, with much of that acceleration attributed to the growth in both mobile and mobile payments. Mobile payments have been designed to be instant and require minimal customer input. With more brands looking to mobile payments as an opportunity to create better user experiences, the global market for mobile commerce has taken off. In 2017, the market value came in at USD 2,943.58 billion, with a compound annual growth rate of 37.8%.
As mobile-enabled payments become more popular, these lower-friction solutions can become even more effective when paired with financing. At Bread, more than half (54%) of our users apply for financing from a mobile device. The intersection of mobile and ecommerce is a nexus with a huge potential for growth in your business.
Trend 1: Mobile wallets are more popular than ever before
Consumers are increasingly willing to leave their actual wallets at home when shopping–even when shopping in-store.
A third of consumers shared that they used cashless options for 50% of their in-store purchases. An additional 25% reported using their mobile wallet to pay for 75% of purchases. Collectively, 68% of survey consumers indicated that they used their mobile wallet to pay for at least half of their in-store purchases.
The impressive adoption of cashless checkout can be partly attributed to its accessibility. More mobile payment technology is available to consumers than ever before, not to mention more stores are offering cash-free payment options. Simply put, consumers now have an unprecedented number of payment options to choose from.
Consider the adoption of ApplePay, which reflects a steady upward trend. The mobile wallet, managed with your iPhone, was released to the public in 2014. Today, reports suggest that as many as 383 million people use the app as a mobile wallet, with a 135% year-over-year growth trend. Approximately 900 million people use iPhones, which means that Apple Pay boasts an impressive 42.5% adoption rate.
Experience matters. Retailers with both in-store and online business can drive sales in 2020 by adding the convenience of cashless payments to their checkout experience.
Trend 2: Social commerce via mobile will become more prevalent
Social platforms are how most of us stay connected to our co-workers, family, and friends. Connecting social with mobile payment is a big deal for driving adoption of mobile payment and social commerce, lowering friction and increasing convenience for billions of consumers.
WhatsApp is one example of a social app embracing the mobile payment movement. The messaging platform, which reached 1.5 billion monthly users in 2018, kicked off its mobile payment service with a pilot program in India. WhatsApp’s person-to-person payment team, which is headquartered in London, is currently working on what will eventually become a globally available service.
However, WhatsApp is not the first social messaging app to buy into mobile payments. WeChat, a Chinese messaging app, features in-app digital payments to users. And, it’s incredibly popular. During the six days of the 2019 Lunar New Year alone, 823 million people sent or received money via WeChat. Facebook also successfully launched a money-sharing feature in its in-app messaging platform.
This trend is yet another example of the emerging market for more convenient payment methods. As mobile payments make money sharing easier and faster, consumer expectations will continue to shift, and retailers will need to embrace technology that allows them to keep up with these evolving demands.
Trend 3: Security and fraud prevention are improving
As mobile payment adoption increases, so do concerns about fraud and security.
An unprecedented number of consumers want more digital payment security—and they want this security to be effortless. In 2015, 66% of consumers wanted to use their mobile phone to detect and act on fraud. In 2017, that percentage rose to 80%.
Companies like Visa and Mastercard are responding to increased demand for mobile-enabled security and fraud prevention by building stronger mobile payment features. The two electronic payment giants will begin offering contactless payment terminals by 2020. The new system will require additional ID verification, thus making fraud more difficult to pull off.
Public attitudes towards the security of digital services are also shifting. Education on digital security presents the greatest opportunity to make online transactions more widely accepted by the general public. Currently, the two biggest obstacles to mass adoption are privacy and security concerns, as well as lack of technical confidence.
As mobile security measures become stronger, adoption of new forms of payment will only increase. By securing these channels and educating consumers, they’re more accepting of trying out different forms of payment.
Trend 4: Loyalty programs are growing
For companies that want to drive mobile payment user adoption, loyalty programs are a good place to start. Loyalty programs give users a reason to use mobile payments beyond just the convenience. Member-based incentive programs typically offer discounts or other perks that encourage a specific behavior. By offering rewards for certain user actions—like paying with mobile payments — you can guide users towards a desired outcome in a scalable way.
Starbucks presents a great example of a mobile payment loyalty program. The coffee company heavily invested in its mobile payment program, which is the payment platform customers use whenever placing an order on Starbucks’ app. As part of their mobile payment initiative, Starbucks uses a loyalty program to encourage users to continue to place orders through the mobile app, rather than in-store.
And, the investment paid off: in 2018, the number of people using Starbucks’ mobile payment app surpassed that of Apple Pay, Google Pay, and Samsung Pay.
To ensure its visibility, Starbucks’ loyalty program, ‘Starbucks Rewards,’ is featured front and center on their app. The perks of the program, such as free food and beverages, free in-store refills, and skipping the line, are clearly advertised to drive membership.
Starbucks competitors, like Dunkin’ Donuts, took the hint and made their own similar mobile payment app.
Incentives offer instant gratification and can go a long way to encourage repeat purchases. Looking ahead to 2020, companies should drive customer loyalty with reward programs facilitated through mobile payments. Not only will customers benefit from a more convenient way to pay, they’ll also enjoy perks for returning to your company—rather than your competitors.
In 2020, err on the side of convenience
If given the choice between two options, consumers will almost always choose the more convenient one. It should be your mission to strive to deliver more convenience to your customers. Ecommerce companies can use mobile payments to provide more convenience, boost customer satisfaction, and even gain customer loyalty.
The more seamless your checkout experience is, the less your customers need to even think about payment, and the happier they’ll be. Retailers with knowledge on current mobile payment trends have the advantage—as long as they use those trends to design a more enjoyable ecommerce experience for their in-store and online customers.