Mobile wallets, mobile payments and the security they require were all in the news this week, which is a welcome development. Growth in mobile payments may be global, but it can also feel glacial at times. Mercator Advisory Group reported that U.S. mobile payment use lags behind other regions of the world, particularly Asia. Globally, about half of all smartphone owners used some type of mobile payment in the previous year, including one in four who used a universal mobile wallet and one in three who used retailer mobile payment apps.
So why the inertia in the U.S. market? For one, consumers are often disinclined to swap their default payment cards within their mobile wallets. At the same time, security and fraud concerns around storing payment data on their phone has scared some consumers away from adopting mobile payments.
Yet, the stories this week indicate that the tide may be shifting. U.S. consumers have been quick to adopt retailer mobile apps, at approximately twice the rate they’re adopting other new forms of payment. Much needed updates to the Pays – notably Apple Pay and Samsung Pay – have given way to more traction in the mobile payments space. And P2P payments providers have demonstrated resolve to take security and fraud more seriously, as a new report finds that account takeover fraud now drives the largest digital fraud losses for North American financial institutions.
Change is opportunity. So, if the ball is in play, how do you get in the game? Mercator predicts that the real growth in mobile payments will come when features and benefits (think mobile order and pay as in Door Dash) inspire consumers to adopt. “In fact, 7 in 10 smartphone owners indicated that rewards, incentives and discounts for using mobile payments would motivate them to pay with these apps more often,” writes Karen Augustine, Mercator’s Manager of Primary Data Services.
Here are four stories this week to help you sort through the change that’s happening in the mobile payments world:
It’s Time to Stop Sending Money on Venmo
While Venmo once had a stronghold on the P2P payments space, consumers are beginning to question whether other payment apps do a better job. As Venmo slowly begins to take a backseat, credit unions should and must be ready to capitalize on the next P2P app trending with their members. (learn more about our Zelle Integration solution)
Are the “Pays” Finally Taking Off?
Two of the “Pays” – Apple Pay and Samsung Pay – have been making news over the past few weeks. Apple Pay added Costco, CVS and 7-Eleven to its merchant lineup. Samsung Pay celebrated its third birthday with the announcement that it has processed an impressive 1.3 billion transactions. Are the Pays finally gaining real traction? And, as the Pays take off, should credit unions double down on incentivizing usage?
Data: The New Causes of Mobile Payments Fraud
A new report from Aite Group and Early Warning identifies account takeover fraud as the largest driver of fraud losses within digital channels at North American financial institutions. This is largely thanks to widespread data breaches that make financial information easily accessible to fraudsters. There is hope in the P2P space: Early Warning reports that no measurable ATO fraud has been detected on its Zelle payment network due to its advanced authentication practices.
Study: Consumers Adopt Retailer Mobile Apps at Double the Pace
Universal wallet and P2P apps aren’t the only place consumers are using their cards to transact. According to a new study, “consumers are downloading retailers’ mobile apps at double the rate of years past and conducting more in-app purchases.” In fact, two-thirds of consumers have downloaded a retailer’s app. More than half were enticed to do so by a discount or coupon offer, and nearly half used it the app to make a purchase.
As mobile payments continue to gain traction, meeting your members’ digital expectations will be a top priority. Get a complimentary full day of strategies and tools to launch digital transformation at your credit union at a CO-OP Roadshow this summer and fall.