Driven by the growing popularity of mobile shopping, more and more payment options are flooding the market.
The thing that may surprise some retailers: those mobile payment options aren’t a passing trend. Mobile commerce, including in-app payments and mobile browser payments, accounted for 48 percent of digital commerce sales globally as of 2017, and are forecasted to reach 70 percent by 2022 according to McKinsey & Company. Mobile wallets, in particular, are consistently growing in popularity; the mobile payment market was valued at $601 billion in 2016, and is projected to reach $4,574 billion by 2023, according to Allied Market Research. Faced with those statistics, retailers racing to put omnichannel in focus for 2019 should integrate mobile payment options into their e-commerce strategies as well, said industry leaders on the expo floor at NRF’s Big Show.
“A one-size-fits-all approach to payments doesn’t work on a global scale,” said Ralph Dangelmaier, CEO of online payments company BlueSnap. “Consumers want options.” Those options, he said, need to include mobile payments and digital wallets like AliPay, Apple Pay and Google Pay.
There are plenty of reasons for consumers to seek out alternative payments like mobile wallets, but chief among them is ease of use.
“Convenience is king,” said Kamran Zaki, president of payment platform provider Adyen North America. As mobile shopping surges in popularity, retailers will need to focus on mobile purchasing options to remain competitive. “Optimizing the design and function of mobile checkouts is more important than ever,” he said.
Zaki added that stores that don’t offer convenience are losing billions in potential sales. According to a recent study commissioned by Adyen, 86 percent of U.S. consumers have left a store due to daunting lines at checkout only to head to a competitor or skip the purchase altogether.
Purchasing decisions are made just as quickly online, making facilitating easy payments critical. “Consumers no longer have to memorize their card information or type in 15 numbers for every purchase,” Dangelmaier said in reference to e-wallets. “When shoppers have the payment options they want and the most streamlined path to purchase, that’s when they convert.”
And providing custom perks help too, said Zaki. “Shoppers want experiences tailored to them as individuals, from personalized coupons, to deals based on past purchases, to recommendations based on their geographic location,” Zaki said. Some mobile wallets tied to retailers, like the pay-with-app feature from Starbucks, even allow consumers to earn rewards points.
Consumers also respond well to digital payment options that provide added security, especially protections against identity theft. Dangelmaier said that technologies like Apple Pay make consumers feel secure, since they require shoppers to scan their fingerprints or faces to authorize a payment. There are security advantages on the merchant’s side, too. “Apple Pay also adds an extra layer of security with tokenization so that no one, not even the merchant, has access to the full credit card number,” said Dangelmaier. That’s a huge advantage in an era when even the world’s largest retailers are victim to serious data breaches.
Retailers who neglect the mobile wallet may also be missing out on international e-commerce customers. “In markets like Asia and Latin America, many consumers are mobile-first,” said Zaki. Mobile wallets can be an easy remedy. Dangelmaier agreed with Zaki, pointing out that international purchases are already more costly and expensive than domestic ones. “If your payment setup isn’t localized, you’re creating unnecessary friction for your global customers’ payment experience,” Dangelmaier said.
While installment-pay plans like Klarna and Afterpay are gaining traction among consumers making larger purchases, retailers who want to convert new customers—and maintain repeat customers—need to be thoughtful about implementing mobile wallets. “A complicated checkout process makes consumers feel confused,” Dangelmaier said. “An insecure checkout process makes them feel vulnerable.” Neither of those is likely to make a purchase.