Several years ago, we published a blog post entitled “Mobile Payments 101: The Difference Between Mobile Wallets and Mobile Payments.” However, confusion about the definition of “mobile payments” and “mobile wallets” continues. Even more importantly, there have been some significant changes on both fronts since the original blog appeared on our website. Such confusion is well worth clearing up.
Mobile Payments vs. Mobile Wallets: What’s in a Name?
Mobile payments are generally defined as payments made with a smartphone or tablet. According to Juniper Research, most mobile payments are remote—i.e., initiated from web browsers or apps and transmitted over the Internet, or are sent via text messages.
Mobile payments also include “proximity” or “contactless” transactions completed to pay for goods and services in retail stores and other physical locations. In this scenario, consumers utilize their smartphones to wirelessly transmit payments to a nearby point of sale terminal or another device, usually using the Near Field Communications (NFC) protocol. Many merchants and other players have developed their own mobile payment apps; Starbucks is just one of myriad examples.
Mobile wallets can be considered a subset of mobile payments, although they are different in that they are used only as a form of in-person payment for goods and services at the point of sale. Consumers input their credit card information into these apps, which store data for future use. Cash, coupons, and other information can also be stored on mobile wallets.
There are different mobile wallets for different smartphones: Apple Pay (for iPhones), Google Pay (for Android smartphones and formerly known as Google Wallet), and Samsung Pay (for Samsung smartphones). Other mobile wallet options are compatible with smartwatches, like Fitbit and Garmin. Banks previously played in the mobile wallet space, but bank-branded mobile wallets such as Wells Fargo Wallet, City Pay Masterpass, and the in-store version of Chase Pay have all disappeared from the landscape over the past few years.
Moving Toward Growth
Statistics also indicate growth in mobile payments and mobile wallet usage rates. For example, in its research for the 2019 edition of its annual North American Payments Insight Series, payments consulting organization Mercator Advisory Group asked consumers whether they had used their mobile phone to “pay for goods and services by using a downloaded mobile app” or by making a purchase via their mobile browser. Of participants in the survey, 60 percent said they had used some type of mobile payment method to get the job done last year, up from 48 percent in 2018 and 50 percent in 2017.
Additionally, 44 percent of survey respondents reported that they had utilized a retailer’s mobile app to complete a transaction in 2019, compared to 34 percent in 2018 and 32 percent in 2017. Thirty-six percent noted that they had handled a transaction with a mobile wallet last year; only 28 percent claimed to have done the same in 2018 as well as in 2017. Finally, 36 percent of participants in the survey reported having made payments via a mobile browser in 2019, compared with 29 percent the previous year and 33 percent in 2017.
Similarly, a report by Allied Market Research pegged the global mobile payments market at $3.388 billion by 2022, representing a compound annual growth rate (CAGR) of 33.4 percent beginning in 2016. Another report, this one from Zion Market Research, valued the global mobile wallet market at approximately $3,142.17 billion by 2022, up from $594 billion in 2016 with a CAGR of around 32 percent between 2017 and 2022.
Fuel for the Fire
The convenience of mobile payments—the ability to make payments from anywhere, at any time, and in a way many perceive as more secure than handing over a credit card at the point of sale—is adding to their appeal in consumers’ eyes. This, in turn, is sparking the growth underscored by statistics. So, too, is the option to avoid waiting in long queues when making purchases in-store. An increasing tendency among businesses to incorporate loyalty programs with mobile payment apps is fanning the flames of growth as well.
Yet another catalyst: an expanding menu of mobile payment solutions. Payment solutions providers have introduced mobile apps that let consumers pay their bills through a mobile application or website, reconciling payments anytime and anyplace. E-Complish’s MobilePay system, for instance, permits consumers to pay bills with their mobile device by opening a link sent in an email invoice. Text-based solutions that offer a secure “pay by text” option—for example, E-Complish’s Text2Pay, fall into this category too.
The mobile payments space will continue to evolve as businesses of all types and sizes recognize the demand for mobile means of handling transactions as well as the benefits to themselves. The latter range faster, easier collection to the ability to provide better customer service, and in the wake of the COVID-19 pandemic, to give consumers a safer way to make payments.
Find out more about E-Complish’s mobile payment systems and solutions here.