A young woman has made plans to join a friend for dinner at a restaurant across town, and with a few clicks on a mobile device she sets her night in motion. Her go-to ride-sharing service has sent a car, she’s ordered a cappuccino from her favorite coffee shop – this one is free because she’s a loyalty member – and her social app pings her friend to let him know her ETA.
And not a dollar or a piece of plastic has exchanged hands.
Can this young woman remember when she had to pick up the phone and call for a ride? What about when she had to ensure she had enough cash in her pocket to pay for it? Let’s not even get started on the concept of a pick-up / drive-through caffeine offering, or social media outreach. And the mobile device coordinating all this magic? (That’s 2009, 2000, 1994, 1997 and 1992 if you’re following along at home.)
Decades ago the effort to complete these tasks was extensive. Nowadays, and thanks to technology catching up to the consumer experience, these events are coordinated through her mobile device. More precisely, these events are actually coordinated through her mobile wallet and the electronic rails on which that wallet resides.
On the surface, the wallet keeps track of her payment accounts, loyalty memberships and more – seamlessly and securely. Below the surface, biometric identifiers (thumbprints now, retinal and facial recognition soon) grant instant access to gigabits of electronic data and payment networks. From the consumer’s side, she’s free to conduct the business of everyday life unfettered by stacks of credit cards or wads of cash. From the corporate side, a sticky, value-added relationship is formed through the use of technology.
Joining the cashless economy
In the US, consumers have seen glimpses of a cashless future. Since 2015 the domestic market has seen the rise of Europay, Mastercard and Visa – with EMV-equipped checkout now at 58% of retail outlets – as well as contactless payment now available at two million locations. The real bridge, though, is the mobile wallet: Integrating the wallets with online and in-app transactions has expanded the traditional retailer’s footprint from the “real world” back into the digital world.
Ironically enough, the US market offerings are immature compared with those in other parts of the world. This is not a fault of the consumer or the market, but of the technology offerings that have been presented to them.
In China, meanwhile, the statistics for a wireless future are staggering. WeChat Pay, the mobile wallet function of the ubiquitous app WeChat (and a Wirecard client), is actively used by more than 600 million consumers each month. In China, 93% of consumers use the software for offline purchases in tier 1 and 2 cities, and 44.5% use the app to avoid carrying cash. Alipay, another payment platform (and another Wirecard client), has 520 million users worldwide.
The ubiquity of WeChat Pay and Alipay show us that consumers want a single ecosystem: With just one App, Chinese consumers can chat with friends, pay at the supermarket, buy online, do their banking and finance, and book a hotel room. And with Chinese tourists still outstripping the rest of the world in tourism spending – in 2016 travelers from China spent $261 billion, one fifth of the global total – retailers everywhere are wise to accommodate their payment preferences. In the first three months after Alipay was implemented at the Munich Airport in Germany, sales through Chinese consumers increased by 92%. No wonder The Body Shop in London and the National Bank in Greece decided to start accepting it as well.
Room to grow
It’s clear that the mobile wallet’s future in mainstream commerce is secure in the US as well. In fact, Business Insider Intelligence reports that customer adoption will keep climbing, with 56% of US consumers making $503 billion in mobile transactions by 2020. That stands to reason: The American Marketing Association reported that 33% of 21 to 35-year-olds check their loyalty program rewards on a mobile app. When 28% of the retail market expects to engage this way, the smart retailer follows their lead.
And there’s tremendous opportunity to invite consumers to add a digital wallet to their payment options. Building awareness around the speed and safety of transactions is just the beginning. We need to let consumers know what’s in it for them. Why should they use a mobile wallet and not swipe or insert a card? Plastic can’t store coupons or loyalty programs for you. It can’t tell you about special offers at nearby stores. Mobile wallets can do all that and more.
Digital sea change
What’s par for the course in many global markets is a sea change in the US. So it’s up to us to drive adoption in how we go to market and in the tech we develop. Paybefore reported that Wirecard has leveraged its global payment acceptance and disbursement solutions to launch mobile wallet integration with Apple Pay, Android Pay and Samsung Pay.
Building the technology is one thing; giving consumers a reason to use it is another. To help our clients answer that need, we developed the Samsung Pay Rewards card, which gives users a chance to test-drive their wallet. These are just a couple of ways that we’ve been leveraging our experience developing payment solutions with mobile wallets in 30 countries, in more than 100 currencies, and with connections to more than 200 international payment networks.
As adoption grows, additional functionality such as messaging and social networking can be integrated. Then more consumers will embrace the truly seamless experience our young woman about town enjoys.
By Kevin Brown, VP of Marketing and Product at Wirecard North America.
He blogs about worldwide trends in fintech product development and brand building.