The Rise of Mobile Payments in America

This entry was posted on Tuesday, July 17th, 2018.

The irony is that while some of the most prolific mobile payment platform, such as Apple Pay and Google Pay are from the United States, Americans are not at the forefront of mobile payment adoption, lagging behind countries such as Sweden, Spain, and China. In China’s case, their mobile payments industry is over 50 times that of America’s, which might have been helped that credit cards did not catch on in China the way they did in America. However, some new studies presented by the Economist suggest that mobile payments are finally beginning to catch up in America.

Factors Behind the Uptick

One projection notes that contactless payments will make up about a third of all electronic payments in the US by 2022. Moreover, mobile payments will hit $282 billion by 2021, three times the amount in 2016. What makes that figure significant is that Americans are still reliant on cash. The Federal Reserve Bank of San Francisco says that nearly a third of all US consumer transactions are cash. A major factor in American reluctance is security, preferring cards to smartphones on that basis.

mobile payments

Ironically, there have been improvements in mobile security, but Steven Anderson of Payment Week theorizes that the security improvements might be too new to have influenced that report. Nevertheless, there are a lot of mobile payments gains thanks to the rise of mobile order-ahead systems, such as those seen in Starbucks, McDonalds, and the Apple Pay mobile order-ahead trial at BottleRock festival.

Still on the Cards: Mobile Payments’ Reliance on Payment Cards

Anderson believes that mobile order-ahead services will be the one of the biggest drivers of mobile payments in the United States, but even with that, credit cards will still be a major part of the payments industry. After all, most mobile payment platforms are tethered to tying the account up with some kind of card, be it credit or debit. So much of mobile payments traffic will always involve a payments card.

The Bottom Line

While mobile payments in the United States have not caught on at same kind of pace as  in Europe and China, one particular factor could be that the United States has grown fond of cash or payment cards. However, with the added convenience of mobile order-ahead services, and the fact that mobile payment solutions usually require tethering to a payment card means that mobile payments in America can move forward and thrive even with the general populace’s insistence on more old-fashioned methods. The novelty of mobile payments is not enough to push mobile payments forward, and thus, mobile payments need more compelling reasons for users to get behind it.