Traditionally, consumers have leaned toward using their credit or debit cards to make every day purchases. With payments becoming digital, many consumers now are looking to use mobile payments to replace standard cards.
Recently, a study from 451 Research LLC’s “Mobile Pay and Commerce Advisory Report” surveyed two separate groups of consumers to measure their opinions of existing mobile wallets and payments. One group comprised of over 4,100 respondents included consumers who adopted mobile payments early on. The other group comprised over 4,000 U.S. consumers that represented the entire U.S. population.
There were several key differences between both groups, including how each consumer group intended to use mobile wallets within apps.
“Planned use of mobile wallets for purchases within native applications remains relatively low. In these environments, card-on-file remains a dominant option for transactions and has made proliferation of alternatives difficult,” said Jordan McKee, 451 Research senior analyst.
Consumers also demand payment options that integrate across a variety of channels. “They expect it to seamlessly work across the virtual and physical worlds, much in the same way their credit card is able to today,” McKee says.
This likelihood could be problematic for companies such as PayPal Holdings Inc., as they currently hold 184 million active accounts in addition to leading the online wallet industry.
Another popular mobile wallet, Apple Pay®, has grown with consumers. When consumers were asked if they expect to use PayPal or Apple Pay as their preferred mobile wallet to make purchases within the next 90 days, 67 percent of early adopters said they planned to use Apple Pay, with only 24 percent selecting Pay Pal. For consumers as a whole, 65 percent of consumers selected PayPal with only 50 percent choosing Apple Pay.
On the other hand, consumers who use Android devices that use Android Pay, Samsung Pay, or PayPal for mobile wallets, greatly preferred PayPal. 38 percent of early adopters would select PayPal, with Android Pay coming in at 29 percent and Saumsung Pay at 15 percent. For consumers as a whole, 72 percent would choose PayPal, 32 percent would select Android Pay, and 9 percent for Samsung Pay.
Regardless of where a transaction could occur, the expectancy of using a mobile payment option will change the future of the payments industry. “This expectation will continue to increase the pressure on PayPal, which despite its incumbency online, has significantly lagged in expanding its offline presence. Banks with mobile-wallet aspirations will need to consider how to address the growing omnichannel needs of their customers,” spoke McKee.
Mobile payments have grown considerably the past year and have shown to become important to consumers. As payments continue to modernize and become more digital, mobile wallets and payments could become a main way consumers make purchases.