mobile wallet share 2017

The past few years in the e-commerce landscape have been marked by the rise of mobile payment solutions, and in particular, the mobile wallet. One of the countless innovations enabled by the advent of the smartphone revolution, mobile wallets promise to simplify the financial transactions by making them faster, more convenient and secure. Of course, the success of any payment method is heavily dependent on its widespread acceptability and merchant adoption. While there are more mobile wallets competing for market share now than ever before, it is a fruitless endeavour unless merchants are open to adopting them as a payment method.

So, how has the support for mobile wallets changed over the past year? If the data in Kount’s Mobile Payments & Fraud Survey 2017 report is anything to go by, the answer is quite discouraging.

Merchant Support For Mobile Wallets Drops:

According to data from the report, support for mobile wallets has dropped quite considerably compared to last year. The proportion of merchants supporting mobile wallets has dropped from 34% in 2016 to a mere 22% in 2017. This figure is even lower than in 2015 when about 24% of merchants accepted mobile wallets. So, why is there a drop in merchant support despite increasing mobile sales volume? There could be a few reasons:-

  • Expensive Hardware – Support for many mobile wallets like Apple Pay and Android Pay often requires NFC enabled payment terminals. The hardware overhaul required to enable these wallets can be quite expensive.
  • High Processing Fees – Payments linked to a credit card are classified as a “card not present transaction”. These transactions can often incur high processing fees for merchants.
  • Rising Mobile Fraud – The report also outlines the rising instances of mobile fraud over the past year.
  • Waiting For Widespread Adoption – The majority of merchants (73.3%) believe that there is still some time to go before mobile wallets are adopted en masse by consumers. This could be a reason why many merchants are still holding out.
  • Lack of Vendor Support – Many merchants didn’t have, or didn’t know if their payment service providers supported mobile wallets. Nearly 20.7% of merchants had a PSP who did not support mobile wallets. While 29.3% of merchants did not know if their PSP supported mobile wallets.

This drop in support for mobile wallets can primarily be attributed to smaller merchants. A mere 11% of merchants with annual revenue of less than $5 million supported mobile payments. In contrast, 48% of merchants with annual revenue between $250 and $500 million supported mobile payments.

In fact, support for mobile wallets was low among the merchants less than $100 million in revenue, while merchants with sizable revenue – $100 million or more – have more confidence in mobile wallets.

PayPal Still On Top, But Not For Long

Of course, as mobile wallets rise in popularity, new players are entering the scene with their own offerings. Every year, we new mobile wallets emerge, battling for market share. However, despite this PayPal, Apple Pay and Android Pay continue to be the most widely accepted wallets by a fair margin. PayPal leads in terms of merchant support, with nearly 58% of merchants supporting mobile wallets in 2017. However, this number is remained the same as in 2016, indicating no growth in terms of merchant support. Apple Pay comes in at second, with 48% of merchants supporting it, a modest 3% increase from the 45% support in 2016. Android Pay is in a similar boat, with 38% of merchants supporting mobile wallets in 2017. Once again, this is only a modest increase from the 34% merchant support it enjoyed in 2016.

Visa Checkout managed to bounce back from its disappointment of 2016, with 26% of merchants now supporting it, up from 16% in 2016. Other major players include Samsung (15%) Pay and MasterPass (16%), both of whom improved considerably in terms of merchant support.

However, all of this is set to change quite drastically in 2018, despite a poor 2017. According to a survey of which mobile wallets merchants intend to support in the coming year, Apple Pay is set to come out on top. An additional 39% of merchants had plans to support Apple Pay next year, taking its total support to 87%! This would put Apple in the lead, overtaking even PayPal which would be supported by 83% of merchants by next year.

The greatest growth in terms of merchant’s support will be registered by Android, with 40% more merchants planning to support mobile wallets. That would take Android Pay’s overall merchant support to 78%. In fact, merchant’s support is set to increase for most of the major players like Samsung Pay (11% increase), Visa Checkout (13% increase), MasterPass (8% increase), AMEX Express Checkout (10% increase), ChasePay (9% increase) and Alipay (9% increase).

Actionable Insights

  • Most Merchants expect a significant increase in popularity of mobile wallet over the next 2-5 years. eCommerce and retailers must have plans in place to support mobile payment solutions over the coming years.
  • Apple Pay, PayPal and Android Pay are expected to have highest merchant adoption levels. This could be bad news for other competitors as consumers will continue to gravitate towards these options.
  • A majority of retailers believe that mobile wallets will either decrease fraud or have no effect. This would indicate that mobile wallets are more secure than traditional digital methods.