North American PaymentsInsights

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Mobile Payments: Market Leadership Is Up for Grabs

October 25, 2016
Mercator Research
Over half of U.S. adults are using mobile payments at merchants online or in stores

Mercator Advisory Group survey finds 8 in 10 users of mobile apps such as Apple Pay find them more convenient than payment cards

You must be subscribed to Mercator's North American PaymentsInsights service to download this Report

New research presented in the latest Insight Summary Report from Mercator Advisory Group’s CustomerMonitor Survey Series, titled Mobile Payments: Market Leadership Is Up for Grabs, reveals that over half of smartphone owners in the United States have used their mobile device to pay for goods and services in stores or online. As smartphone ownership reaches 78% ownership among U.S. adults, most consumers have used their phones for mobile shopping.

The study finds that 8 in 10 consumers who use mobile payment apps like Apple Pay which are accepted at multiple merchants consider paying using the app to be more convenient than paying using a payment card. More than half say that using this type of app is faster and more private and secure for payment at checkout in stores than using a payment card. However, although half of users think using mobile payments is easier than using a payment card at checkout, 37% think it’s harder.

As mobile payment use rises, no clear leader yet dominates the market. Starbucks remains the leading brand of mobile payment app, but it is exclusive to a single retailer.

Consumers are gaining familiarity with mobile payments, primarily for its convenience, but they expect more benefits and usefulness from a payment app than just a way to pay. Stimulating use as a primary payment tool will require clear benefits for rewards, shopping aids, and perhaps social interaction, not to mention broad merchant acceptance. Survey data in this report reveals that 7 in 10 U.S. consumers would use mobile payments more often if they automatically received rewards or discounts, whether for every purchase or accrued over time.

This study, based on Mercator Advisory Group’s CustomerMonitor Survey Series payments survey conducted in using an online panel of 3,009 U.S. adults in June 2016, examines the demographic shift and changing landscape of web-enabled mobile users, consumer use of mobile devices for making payments and shopping online and in stores, related payment features including e-couponing, e-receipting, and e-loyalty as well as payment, balance, and fraud alerts, experience with Apple Pay compared to payment cards, and ownership, purchase plans and important features of wearable technology for payments.

“Convenience is clearly driving mobile payments use, as mobile payments become more commonly accepted and used more often, but the customer experience needs to improve before a market leader can emerge” states Karen Augustine, author of the report and manager of Primary Data Services at Mercator Advisory Group, which includes the CustomerMonitor Survey Series.

The report is 78 pages long and contains 32 exhibits
Highlights of this report include:

  • Year-over-year trends in smartphone and tablet ownership by screen size 

  • Year-over-year trends in use of mobile phones for shopping online and to support in store shopping

  • Use of mobile payments to merchants including retailer-specific branded mobile payment apps, online and in stores 

  • Universal mobile app experience: payment cards loaded, preferred card, and most recently used and satisfaction compared to payment card use 

  • Demographics of mobile users and mobile payment users and satisfaction with operability of mobile phones

  • Challenges to mobile payment adoption and frustration with mobile-based coupon organization and redemption

  • Shifts in use and delivery methods for six types of financial alerts

  • Shifts in use and interest in e-couponing, e-receipting, and apps for coupon and receipt storage and management

  • Use, interest, format, and importance of features for wearable technology including payments, mobile banking, and money transfers