New ways to pay
While mobile payment hasn’t taken off yet like everyone else expected, mobile wallets are quickly becoming the norm.
According to a report by Urban Airship, mobile wallets are becoming popular because of “non-payment” features, such as coupons and rewards cards. The report comes from a survey of 2000 adults, both in the US and the UK.
The findings were surprising because, as it turns out, companies aren’t taking advantage of mobile wallets enough.
What is a Mobile Wallet?
Before delving into the research of mobile wallets, first we need a quick primer on what mobile wallets are. Mobile wallets are an app or feature on a smartphone that let you carry digital credit cards, rewards cards, boarding passes, movie tickets, and more. The misconception is that mobile wallets and mobile payments are synonymous (and usually they’re used that way). It makes sense, because that’s what they’re used for.
But in reality, mobile wallets carry much more. Take the Wallet app on Apple iOS for instance, one of the most popular mobile wallets. In addition to your credit and debit cards, this app lets you store loyalty cards, coupons, flight tickets, and store cards in your iPhone. Android Pay and Samsung Wallet offer alternatives for those with Android or Samsung smartphones, which also carry credit cards, loyalty cards, and rewards cards.
Who uses Mobile Wallets the most?
According to the same study, Millennials and higher income households use mobile wallets the most.
67% of Millennials are likely to have used mobile wallets in the past three months, compared to just 51% from Generation X respondents. Younger people are usually more tech-savvy and attached to their phones, making them more likely to use it.
Similarly, 62% of respondents with annual household incomes of $60K or more used mobile wallets in the past three months, compared to 39% with annual household incomes of less than $60k. Smartphones aren’t cheap, so obviously only a select group can even use the wallet feature.
Why are Mobile Wallets becoming more popular now?
Technically speaking, mobile payments have been around for a while. In 1997, Coca Cola set up vending machines in Helsinki, Finland, that dispensed drinks after customers texted a specific number. Two years later, they were used to sell movie tickets. In 2011, Google announced Google Wallet, which allowed Android users to split checks and pay for certain items using their Android smartphones.
Mobile pay, however, didn’t reach critical mass until Apple stepped in with Apple Pay in 2014. Apple’s main differentiator was the amount of iPhones currently in use, combined with the strong initial retailer support. Apple’s simplified design for payment- a fingerprint tap on your phone over an electronic screen, combined convenience and security, making adoption even more inevitable.
With recent additions of Samsung Pay and Android Pay, as well as ever-increasing retailer support for mobile pay, mobile wallets are on track to become a regular way of purchasing products and services. According to Business Insider, in-store mobile payments in the US alone reached $75 billion in 2015, estimated to reach $503 billion by 2020.
To read more about where Mobile Wallets are headed, and the various opportunities that e-commerce brands have yet to tap into, read the second part here.