An In-Depth Look at Mobile Wallet Solutions for Your Business

Modern consumers demand convenience and the ability to pay quickly.  As a business owner, you know that being ready to accept and quickly process mobile payments will help you meet consumer demand and potentially increase your sales.

However, getting ready for mobile wallet acceptance can be a daunting task for most small- and medium-sized Businesses (SMBs). Currently, only about 16.6 % of U.S. SMBs accept Apple Pay and 16% accept Google Wallet. Samsung Pay is not far behind at 11.3%.¹ In short, SMBs have plenty of room to grow in terms of mobile wallet adoption.

Most Popular Types of Mobile Payments

In an earlier post, we provided an overview of the mobile wallet trend. This time, we will focus on the perks and downfalls of different digital payment solutions to help you make an informed decision for your company’s payment processing needs.

Mobile Wallet Solutions Are Ideal for Your Customers

Hopefully, you are already convinced that your business should accept mobile wallets sooner rather than later. If not, here are a few of the benefits of offering mobile payments:

Ready to take the plunge? Start by familiarizing yourself with the most popular and fastest-growing options.

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The Pros and Cons of Popular Mobile Wallet Solutions

When people in the United States think of mobile wallets, they tend to think of technology brands. Apple, Samsung and Google all make phones and software, as well as offering mobile wallets. Each of these brands has great things to offer users, as well as a few drawbacks.

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Just One in Four Apple Pay Transactions Come From the U.S. (Digital Transactions, August 1, 2017)

Apple Pay: Apple Pay users are the most likely of any domestic mobile wallet users to a mobile wallet as a payment method.  At least 22 percent of Apple users have tried their mobile payment system at least once. That may not seem like a lot, but that’s more than other major providers.

Apple also represents a large portion of smartphone users in the U.S., making their mobile payment solution great for retailers that want to reach as many people as possible.

On the other hand, there are still many Apple users who are not using the mobile wallet yet.  Another drawback to Apple Pay is that it does not work for online payments, and the company does not seem likely to change that.

To accept Apple Pay, businesses are required to have a near field communication (NFC) reader, which is a credit card machine that reads RFID chips embedded in newer credit and debit cards. NFC is a very secure system, but it does have a potentially higher cost for those who operate in moving locations. Mobile NFC readers are available for these types of merchants who are willing to invest in mobile NFC technology.


Samsung Pay:  Customers like the fact that they can use Samsung Pay at more than 30 million locations, much higher than the 4 million who take Apple Pay. Retailers like that Samsung Pay works with a wide range of credit card processors and terminals.

Samsung Pay is compatible with MST technology, meaning that businesses using the wallet would not necessarily need to upgrade their terminals to accept NFC and customers get the convenience of paying instantly with the security of a system locked by a PIN or a fingerprint.

Although Samsung Pay has a limited number of current users, it boasts the highest overall repeat usage rate, with 4.5% of Samsung users utilizing the service more than once.


Android Pay: Like Apply Pay, Android Pay uses an NFC-fingerprint system that provides users with extra security. It lets users save payment information and pay directly at the terminal with a host of different Android devices.

The downside of Android Pay is that it just is not getting used much. It is only accepted at approximately 1.5 million locations in the U.S., but those include McDonald’s, Lyft and even Etsy.

Don’t Ignore International Payments

If you are an online business, international shoppers can be a major source of income. China, specifically, has seen a boom in online shopping with mobile wallets in recent years.

Those with physical stores will also benefit from looking into Chinese mobile wallet solutions, as the growing Chinese middle class is increasingly spending money via tourism and shopping.

Currently, AliPay and WeChat are dominating the Chinese mobile wallet market. In 2016, AliPay and WeChat Pay processed roughly $3 trillion in payments. Compare that with $81.6 billion in 2012, and the change in only four years is phenomenal. The use of these mobile wallet systems increased from only 3 percent of online sales to 17 percent in less than half a decade.

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AliPay: If Chinese tourists are going to spend an estimated $40 billion in the United States this year, don’t you want some of those sales?

AliPay is owned by Alibaba, and it is- incredibly popular with Chinese shoppers. Last year, it was used for $1.7 trillion worth of transactions. There are more than 450 million users of this mobile wallet, and retailers who accept this mobile wallet could benefit from that popularity.

The biggest downside of AliPay is that it currently does not have a big user base in the U.S. However, the company’s pending deal to acquire U.S.-based MoneyGram will undoubtedly change the game. If that deal passes Congressional scrutiny, Alipay’s presence could significantly increase in the U.S.


WeChat Pay: WeChat, owned by TenCent, processed $1.2 trillion in 2016 in both user-to-user transfers and retail shopping purchases. The growth rate of WeChat has been incredible, and any retailer or website that hopes to secure purchases from Chinese shoppers should accept the WeChat mobile wallet as a payment method.

At least 100 million WeChat Pay users are outside of China, showing it has great growth potential. Like AliPay, the biggest downside to WeChat Pay is the lack of domestic users.

However, by offering both Alipay and WeChat Pay, your retail shop or website can make itself much more competitive to Chinese tourists and online shoppers.

Digital Wallet Pros Cons
applepay
  • Apple represents a large percentage of users in the U.S.
  • 22% of Apple users have tried mobile payment (higher than most other providers)
  • Requires merchant to invest in a credit card machine with NFC reader
  • Only  4 million retail locations accept Apple Pay
  • Not compatible with Android devices
samsungpay
  • Accepted by more than 30 million locations in the U.S.
  • Works with a wide range of credit card processors and terminals
  • Highest number of repeat usage among consumers
  • Only works with Samsung devices
androidpay
  • Works with any Android device with NFC that’s running compatible software, regardless of the brand
  • Only accepted at approximately 1.5 million locations in the U.S.
google-wallet-logo-png-11
  • Brand recognition
  • Requires a Google account
  • Credit and debit card fees
  • Focuses on person-to-person mobile payments
alipay
  • More than 450 million users
  • Pending acquisition of MoneyGram will expand presence in the U.S.
  • Millions of Chinese tourist visit the U.S. each year
  • Limited audience outside of China
wechat-pay-logo-en.jpg
  • Processed $1.2 trillion in digital payments in 2016
  • 100 million users are outside of China
  • Millions of Chinese tourist visit the U.S. each year
  • Limited audience outside of China

The Future Looks Bright

While naysayers can point to low adoption and use rates as signs that mobile wallets don’t really benefit retailers, the boom in China’s use of mobile wallets shows that if retailers accept these mobile wallets, users will eventually start using them.

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With generational shifts led by Gen Z and Millennials. we can expect worldwide adoption of this payment system sooner than expected.

According to the Electronics Transactions Association (ETA), U.S. retailers of all sizes are planning to accept mobile wallets within 1 – 3 years. Mobile wallet payments are expected to exceed $1 trillion globally by 2019.¹

The good news is that it is easy for small- to large- merchants to set up for mobile wallet acceptance. Whether you’re operating a niche retail website, a booth at fairs and special events or a physical storefront, mobile wallets represent an ideal payment processing solution for your business.

  1.  ETA Transaction Trends, “Graphic Content: SMBs and Mobile Wallets in the U.S.”, August 3, 2017

 

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