The Mobile Payment Adoption Plan Pivot

Mobile payments.

Two words that, when combined, arguably couldn’t be hotter. While one has become the standard for how much of the world’s population connects to the Internet — and, thereby, each other — the latter has transformed these same devices into the “mobile wallets” that connect those same people to goods and services, often without lifting a finger to complete transactions.

But while the payments and mobile industries themselves are eager to get their technology into the hands of consumers, those consumers seem reluctant to adopt the new platforms. So, what’s the disconnect?

Like any hotbed of technological innovation, many competitors have emerged and crowded the marketplace with options. However, when it comes to making purchases at the point of sale, mobile payments users of the world (and, more specifically, the U.S.) have divided into three main camps: Android (Google), Apple and, most recently, Samsung. These NFC-enabled payment platforms (that’s Android Pay, Apple Pay and Samsung Pay, respectively) have, in just a matter of years, revolutionized the way consumers interact at the point of sale.

In addition to these NFC-enabled platforms, there is also the lot of P2P payments options — PayPal, Venmo and Square Cash among them — that allow for money to be sent to individuals, as well as retailers and other merchants.

However, it’s the NFC players who have stolen the show. Apple has taken the single-channel approach, driving the user experience primarily from its iOS. Android has adopted an open platform approach, which allows brands and the tech-savvy users of the world to customize the payments platform to function within their applications. Meanwhile, last year, Samsung acquired LoopPay, a technology that makes Samsung Pay compatible with standard magnetic stripe terminals, instead of relying solely on merchants to adopt NFC-enabled payment hardware. All three approaches have their benefits and their drawbacks.

So, who’s winning? Which platform has accrued more market share, more users, more merchant adopters, and which does the higher volume of sales? It’s kind of tricky to tell. But that doesn’t mean PYMNTS isn’t trying.

MPD CEO Karen Webster did the “back of the envelope” math in an article last summer (right around the time Android was launching its payment platforms) to reveal that, of the 187 million smartphones in use in the U.S., as of March 2015, only 6 million of Android’s total users and 14.4 million of Apple’s total users had the devices and software necessary to use the payment apps.

And despite optimism at the beginning of the year that 2016 would be the year of mPayments adoption, that does not seem to be playing out so far. A recent study from PYMNTS looked at Apple Pay adoption specifically. The results were shared at PYMNTS’ Innovation Project 2016 held at Harvard University in March and online in the Apple Pay Adoption Tracker and found that, although many consumers are trying Apple Pay, they are not becoming habitual users. Usage was down 41 percent from the same time the previous year, and the study also revealed that consumers are consciously choosing to use another form of payment — namely, a card.

The lack of adoption isn’t unique to Apple Pay; adoption of mobile payments is down across the top three platforms. Money Talks News recently reported on a study that showed that only 9 percent of consumers use mobile payment when it’s available. Part of the reason that mobile wallets haven’t caught on, Time suggests, could be due to shoppers having three different platforms to choose from.

What can’t be cited as a reason for mobile wallets’ slow adoption is a lack of trying on the part of the companies behind them. The major players (Apple, Samsung and Android) are making big moves to find more hooks for consumers to not just try out their payment platforms but also become habitual users.

One way they’re trying to entice consumer adoption is through loyalty and rewards programs with major retailers. Android Pay recently announced Tap 10, with a spokesperson for Google explaining to TechCrunch that it’s a “small program currently being tested with a limited set of users.” The program rewards Android users with things like a free Chromecast or song downloads, movies or subscriptions on Google Play in exchange for using Android Pay, a minimum of 10 times (thus the name), at local stores.

Meanwhile, Apple is partnering with retailers like Panera to launch custom loyalty programs that, among other things, encourage pre-ordering meals from mobile devices and an overall enhanced customer experience as part of the Panera 2.0 initiative.

“We’ve had great success [with Apple Pay], and it’s still emerging,” Brian Backer, director of enterprise architecture at Panera, told Retail Customer Experience. “It’s all about speed to service, allowing customer[s] to skip lines. Our Apple Pay in-app option now represents 24 percent of our transactions, one in four, and we’re very happy with that. It’s proving to be an extremely easy, positive experience for our customers, as has the order ahead option, which works extremely well with our demographic.”

Another beacon of hope may be international markets. India, for example, has huge untapped potential and a mobile user base that is just now starting to adopt digital payments and move away from currency as the primary means for transacting at the point of sale. According to a recent article from ZDNet, the current size of the mobile wallet market in India is approximately $53 million and is estimated to grow to $183 million by 2019. In India, however, the mobile payments landscape is even more crowded, with 12 major players, including Alipay (Alibaba’s mobile payments platform) and Paytm. Together, these platforms have a combined customer base said to be more than 125 million. Of this, Paytm alone has over 50 million users, making Apple’s 14.4 million look like a paltry few.