Mobile Payment Apps in the US: 80% Internet Users Are Unlikely To Use Any [STUDY]

mobile payment app usage us 2016

The adoption of mobile payment apps in the US has been flat over the course of the time and the prospects appear gloomy in the upcoming years as well. The Internet users in the US seem quite content with the traditional payment methods and are quite unlikely to adopt the mobile payment apps anytime soon. According to a recent Citi Cards report, nearly four out of every five Internet users in the US are unlikely to use any mobile payment app in the next 12 months. Intact, almost 3 out of every 5 internet users in the country said that the possibility of them using mobile payment apps in the next 12 months is next to nil.

On the other hand, only 21% of the US internet users who were part of the study claimed that they would likely be using the mobile payment app in the next 12 months, albeit only 5% were very confident about this. 

While mobile payments systems like Apple Pay, Samsung pay, etc. are slowly carving a niche in retail sectors, all the above data portrays a disappointing scenario of mobile payment apps in the US. However, in contrast to the findings from Citi Cards, another survey conducted by Retale in December 2015 illustrates that 43% of the respondents used a mobile payment to make an in-store purchase in 2015. The participants appeared enthralled with mobile payment system as a whopping 63% of them agreed that retailers must offer some form of mobile payment in-store at checkout. Although, the respondents were sceptical about the mobile payment to be secure as a significant 28% of them were concerned about data breaches, theft, and loss of mobile device (16.6%).

In December 2015, the research firm eMarketer predicted that mobile payment market would skyrocket in the future. By the end of 2016, the total value of mobile payment transaction will hit $27.05 billion in the US, with users spending an average of $721.47 annually. 37.5 million people, or call it 19% of smartphone users in the US, will be using the mobile proximity payments by the end of this year, and the figures are slated to touch 69.8 million by the end of 2019, which equals to 31% of the total smartphone users in the country.

mobile payment apps in the US 2016 - 2019

“Several factors will drive substantial mobile payments growth in the US. Mobile wallets like Apple Pay, Android Pay and Samsung Pay will become a standard feature on new smartphones. Also, more merchants will adopt point-of-sale systems that can accept mobile payments, and incentives like promotions and loyalty programs will be integrated to attract new users.” said eMarketer analyst Bryan Yeager.

Why is mobile payment a tremendous prospect?

The rising adoption of smartphone around the globe has completely changed the scenario as major retailers are now onboarding the mobile platform aggressively to lure more potential customers. The growth in the smartphone segment would be tremendous according to a report from Cisco that predicts a whopping 5.5 billion people globally – 70% of the world’s population – would own a mobile phone by 2020.

The above estimations have created a big window of opportunity for players in mobile payment segment; the mobile payment industry is estimated to touch the $620 billion by the end of 2016. On the other hand, a recent report from Juniper Research revealed the rising popularity of contactless payments among the people. It highlights that nearly 148 million smartphone users in the world are estimated to adopt NFC-based mobile payments, likes of Apple Pay, by the end of this year. Interestingly, ApplePay and Samsung Pay, together, are expected to acquire 70% of new mobile payment users.

Unfortunately, despite all the advantages mobile payment offer, only a few people have adopted this technology. According to the latest study by Trustev, only 20% of the users in the US have tried Apple Pay, while the percentage of Samsung Pay and Android Pay users are even lower. Only 14% people have admitted that they have used the mobile payment technology, and 36% of those people called themselves a “weekly” user.

However, despite the low user engagement rate, the satisfaction rate for the customers who have used any of mobile payment methods is quite high. More than 90% of the users who tried Samsung Pay in beta version said that they were impressed and would recommend it to others also.

Mobile Payment Apps in the US: Retail adoption

The adoption of mobile payment apps in the US is much slower despite being a futuristic and effortless way to transact money. The mobile payment apps industry is in its nascent stage, and the overall mobile payment mechanism is yet to mature. Therefore, experts believe, that security concerns are the major issue, consequently, customers shy away from using mobile payment apps at retail.

Due to the slower adoption of mobile payment apps among customers, only a few of the businesses accept such kind of payments in today’s date. A meagre 23% of the small businesses across the globe have embraced this technology.

However, Customers as well as retail chain, both, would be befitted from this futuristic technology, a survey by Apple revealed that the clients tend to spend 25% to 50% more per transaction when they use ApplePay. Around 1 in 3 merchants have accepted that a substantial 30% of their revenue is coming via mobile payments.

Security concerns

Primarily, sellers are insolent towards the mobile threats and frauds in spite of the fact that a meagre 1.9% of them noticed a major increase in mobile fraud. A whopping 50% of the sellers were sceptical about the change in the rates of frauds in the past year. 43% of the merchants were ignorant about how much they have lost through mobile frauds. To counter such frauds, 20% of the sellers believe that innovation is the key to combating such frauds. However, the cost of building such an anti-fraud solution is rather too expensive according to 31.1% of the sellers.

To enhance the security major banks are embracing HSC (Host Card Emulator), that would store all the sensitive information of the user on the cloud. Thus, third-party players would not have much say in mobile payment systems, which will result in convincingly secured mobile payment system. Thus, the prospects appear quite appealing and soon no one would have to care about carrying his wallet in the future as the smartphone would soon evolve as the ultimate device to perform many essential activities in the universe.

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