As the holiday season continues and the frequency of payments spikes, understanding how and where consumers use different payment devices is invaluable to both merchants and issuers alike, helping assist in customer service, authorization, and fraud strategies. In this three part blog series, Javelin identifies key spending metrics for the in-store, online, and mobile channels, as well as methods of improving the frequency and value of a payment method with practical methods for issuers and merchants to determine how to balance their payment strategy this holiday season and through 2019.
Mobile payment preference will require further definition in 2019 as multiple ways of making mobile payments is expanding. Currently 40% of consumers use mobile payments in some way with stored value prepaid soon coming into the top 3 position of payment selection. Merchants are increasingly enabling consumers to add and load prepaid cards into the mobile applications. The gift cards that are given as gifts this holiday season can easily be added to the mobile application and will increase the rate of usage. The days of the gift card lost in the desk drawer are short lived.
Mobile payments might be the newest retail payments channel, however 40% of consumers have started using mobile payments as frequently as they use e-commerce. This is a significant amount of transactions and may be part of the reason why e-commerce payments are not higher. Consumers split time between browser based and mobile payment applications.
The majority of consumers, 60%, have not found a reason to use mobile payments to make purchases. The top reasons for lack of usage is the concern about payment security and not seeing a benefit to shopping in the existing e-commerce and POS channels.1 Having technology days in branch will help provide consumers with greater understanding of how mobile payments work and the benefits of using the payment method.
The frequency and dollar amount purchased with mobile payments is consistent with how people pay for goods and services in an e-commerce browser, for now. The dollar amount may start to fluctuate as more businesses see the value of having an integrated mobile experience and build more immersive experiences that solve every day challenges consumers face. An important component to adding new payment methods into the mix is moving from perceived value to actual benefits.
1Javelin Strategy & Research, September 2018, Mobile Wallet Wars: A Battle for Consumer Loyalty