Mobile payments have been around in some form or another since the beginning of the 21st century. Digital wallets, in which consumers can add funds as well as credit and debit cards, have recently gained in popularity with the introduction of Apple Pay, Google Pay, and others. Yet many consumers are reluctant to depend on these technologies. Only 16% of consumers report using a mobile wallet, perhaps because only 36% of merchants offer support for them at the point of sale.
But all that is changing. It was estimated that 64 million individuals in the United States made a proximity mobile payment in 2019. And over 69 million made a peer-to-peer transfer via a mobile phone, which translates to roughly a third of smartphone users.
As it has done in many other areas of commerce, COVID-19 is set to take an emerging trend and supercharge it. In order to minimize contact with others, many careful shoppers are adopting contactless payment methods like digital wallets, as well as increasing the proportion of purchases made online. In 2020, post-COVID, 6% of all consumers reported using a mobile payment mechanism for the first time per Forbes.
Even more exciting is the advent of mobile payment technology utilizing direct bank-to-bank transfers. Merchants love this technology because by circumventing the credit and debit system, the merchant is able to avoid fees on every transaction. In fact, this payment technology has already reached fixation in many countries: in Sweden, around two-thirds of consumers use Swish to pay. In India, the Unified Payments Interface processes $20 billion every month. In the United States, however, no such system has emerged. The majority of consumers still use credit or debit cards for their purchases.
The time is ripe for a mobile payment disruption.