Mobile payments: Looking beyond millennials
This entry was posted on Wednesday, February 22nd, 2017.
The number of mobile payment users is projected to increase from 50.8 million to 76.0 million, or 24.3% to 33.1% of total smartphone users, between 2017 and 2020. In addition, mobile payment transaction value is expected to more than double in 2017, hitting approximately $62.49 billion.
Perhaps not surprisingly, the millennial generation has been the most enthusiastic about adopting the technology. Indeed, eMarketer estimates that more than a third of millennial smartphone owners will choose mobile payments this year – accounting for more than half of total mobile payment users in the U.S. In addition, a recent survey commissioned by VocaLink found that more than a third of Dutch millennials (36%) and a quarter of UK millennials (25%) are now making mobile payments in-store, online and in-app.
Gen Xers and baby boomer shoppers are also expected to increase their use of mobile payments, with the number of active users projected to jump from 50.8 million to 76.0 million, or 24.3% to 33.1% of total smartphone owners, between 2017 and 2020. Moreover, a recent survey commissioned by the Mercator Advisory Group found that 53 percent of polled smartphone owners paid by mobile phone at checkout within the past year.
Nevertheless, most mobile wallets do not yet offer a compelling enough reason for the majority of consumers outside the millennial demographic to leave their credit and loyalty cards at home. Indeed, shoppers want a simplified mobile commerce experience that stores eReceipts, loyalty memberships, coupons and promo codes – while automatically applying relevant discounts and split purchase options to their purchase at checkout.
According to Forrester Principal Analyst Brendan Miller, some branded mobile apps with payment features, such as Starbucks, have successfully combined loyalty programs and point redemption. To be sure, the coffee giant began adopting mobile payments as early as 2009. Mobile transactions now count for approximately 25% of all in-store sales, with the retail chain offering customers convenience and value by allowing them to order in advance, make easy payments and receive automatic loyalty and rewards. This has incentivized mobile payment app use, reduced queuing time and driven revenue.
Similarly, Samsung has confirmed meaningful gains since the launch of its Rewards program, with the company’s wallet seeing a “surge” in monthly active users, as well as a significant increase in transaction activity and power users, a group that uses the wallet roughly once a day. As BusinessInsider notes, Samsung Pay’s growth illustrates the positive impact loyalty and rewards integration can have on mobile wallet adoption and use.