Mobile payments: If you build it, they will come

Forty-eight million Americans used one or more mobile pay app last year, and that number is expected to rise to 55 million in 2018, according to eMarketer.

It isn’t Apple, Google or Samsung leading the way here, despite high-profile launches, the backing of analyst fanboys and girls, massive publicity campaigns and loyal customer bases to fall back on. Nope, the winner thus far is Starbucks.

The coffee retailer’s app will be used by 23.4 million people to make a payment this year. That puts it ahead of Apple Pay (22 million users), Google Pay (11.1 million) and Samsung Pay (9.9 million).

Meanwhile, other retailers set to gain ground include Amazon, Walmart, McDonald’s, Target and Dunkin’ Donuts.

According to a Bloomberg article this month, Amazon is offering to pass along the discounts it gets on credit-card fees to other retailers if they choose Amazon Pay highlighting how competitive the market is becoming.

“Retailers are increasingly creating their own payment apps, which allow them to capture valuable data about their users,” says eMarketer analyst Cindy Liu. “They can also build in rewards and perks to boost customer loyalty.”

There is still much work to do, however. My tech-savvy girlfriend isn’t a fan of Apple Pay. “When I use it on the bus to work, I’m already active on my phone,” she says.

“I have to stop what I’m doing, turn the screen off so I can double tap the home button and then I have to scan my thumbprint in order to use Apple Pay. It’s quicker to tap my contactless debit card and I can continue listening to my music etc”.

And therein lies the crux of the matter. Don’t believe the banks, card schemes and various other people with vested interests. Notes and coins still have a huge role to play in the payments ecosystem and will be around for years to come. As do credit and debit cards.

For mobile apps to achieve serious contender status, there has to be a real customer proposition that brings speed and convenience and also delivers more than just a payment.

A few years back, Accenture did research on this and found consumers wanted various add-ons from mobile wallets, but in 2018 few wallets offer such functionalities.

Starbucks is leading the charge Stateside due to its early adoption, but also because of easy use and a loyal customer base that has been incentivized by a robust rewards programme.

In the UK, Tesco Pay is finding success as it allows customers to both pays and collects Clubcard points.

Regular users will attest that it’s a simple but effective offering. Payments via the app now take place every 1.5 seconds. The service recently reached 500,000 customers, following a relaunch in September last year. More than GBP5 million (US$6.63 million) payments are made per week.

In a nutshell, give people the likes of transaction-based incentives and don’t add undue friction.

If you build it, they will come. As things stand, not enough ventures are doing this. So, whilst progress is definitely being made, that all important ‘Uber moment’ remains tantalizingly out of reach.