The introduction of Apple Pay in 2014 made a future without wallets, physical credit cards, or cash seem like a fast-approaching reality. It's just over three years later, and we're still waiting for the dream of wallet-free living to fully materialize.
Though mobile payment adoption has seen growth, and an increasing number of mobile wallets have come to market (including Google Wallet, PayPal, Android Pay, and Amazon Payments), the technology is still by no means ubiquitous.
Below we delve into the current state of mobile wallet adoption in the U.S. and take a look at what other countries that have fully embraced mobile payments might tell us about our future.
The state of U.S. mobile payment adoption
In the U.S. at least, leaving the house without a wallet is not yet a practical or realistic option. Though many high-profile retailers now accept mobile payments, adoption is still sporadic enough to make it unreliable.
As a reporter for CNET notes
, making mobile payments in the U.S. is often a fraught and awkward experience that leaves him feeling like that
tech guy who's making everything more complicated than it needs to be. Though Apple claims that Apple Pay is available in 50% of U.S. retail locations, the 50/50 uncertainty is still enough to cause reluctance about counting on the availability of Apple Pay.
Data from Statista
points to the most common barriers to mobile payment adoption in the U.S. Chief among the reasons individuals surveyed gave for not using their mobile wallet to make a purchase is that paying with a credit card was easier. Other responses to the same survey may point to the reasons why using a credit card still seems like the easier option, including merchants that don't accept mobile payments, unclear signage on payment terminals, and store clerks that discourage mobile wallet use.
Still, the mobile payment landscape in the U.S. is improving all the time. Apple Pay recently introduced person-to-person payments through iMessage. Consumers can also now use Apple Pay to withdraw money from Bank of America and Wells Fargo ATMs. The New York City MTA has plans to introduce mobile payments
in 2021. New research suggests
that the mobile payments market in the U.S. will reach $2.849 trillion in 2020.
Mobile wallet providers are also making concerted efforts to improve adoption. A recent report from Business Insider
highlights Apple's partnership with Fandango to offer discounts to users who make a purchase with Apple Pay. Apple Pay adoption has plateaued around 25% of those with the capability to use it, and this move is specifically aimed at boosting adoption. The report notes that rewards were an effective incentive for Samsung Pay, which increased adoption by 49% when they introduced a rewards program.
Efforts like these, along with more reliable merchant acceptance, may help acclimatize U.S. consumers to mobile payments and hasten the mainstreaming of the technology.
Mobile payments in China signal possibilities
To understand what the mobile wallet revolution could look like in the U.S., we need only look to China, a country where mobile payments have become the norm.
The data on the mobile wallet landscape in China is stark: consumers in China use mobile wallets at a rate 11 times that of consumers in the U.S. In 2016, the size of the mobile payments market in China was $9 trillion USD
, compared to $112 billion USD in the U.S.
In China the mobile pay market is dominated by two players: WeChat (from Tencent) and Alipay (from Chinese ecommerce giant, Alibaba). WeChat is a sort of jack-of-all-trades social media app which also has robust mobile payment features built in. Alipay is the largest mobile payment platform in the world. The company is even experimenting with payments conducted through facial recognition.
In a video from the Wall Street Journal
, a Chinese tech entrepreneur and influencer, tells the reporter that by paying for lunch on her phone before even getting to the restaurant, she stands to save a few dollars on her meal. On the way to lunch she scans the QR code on a bicycle from a bike share to pay for it from her phone. At Alibaba's Huma supermarket, consumers can scan groceries to get more info and add them to their favorites for future delivery. When the shopper is ready to checkout, they do it through Alipay.
It's clear that in China the infrastructure for mobile payments is far more widespread and firmly established than it is the U.S. At least in urban areas of China you would be hard-pressed to find a retailer or service provider that doesn't
accept mobile payments.
Mobile payments are growing in the U.S., but an exclusively mobile wallet-based ecosystem will take more time to develop. However, the example set by China makes it easy to imagine a possible cash and card-less future for ourselves.
If mobile wallet providers incentivize adoption, and if consumer demand then forces retailers to get on board in a more unified and predictable fashion, we could soon see the standard wallet go the way of the day planner and the landline telephone.