Smartphones have fundamentally transformed our everyday life. They have infiltrated thoroughly in every sphere and by 2020 approximately 70% of the global population will own a smartphone. The portability, interactivity, and location awareness make the smartphone an ideal shopping companion, as well. So, it’s not a surprise that 80% of the shoppers in the US turn to their mobile devices for help. The product descriptions, reviews, and price comparisons are just a swipe away.
Mobile shopping has found its spot in today’s fast-living society. People like to be connected 24/7, to have access to special offers and collect loyalty rewards on the go. These features are highly interactive and give users the feeling of control and a sense they are experiencing the world around them. Some engaging activities like rewarding points are also a psychological phenomenon. Higher engagement equals increased purchases. Mobile purchases note a higher rate of impulsive buying as people feel less inhibited. All in all, mobile commerce spending starts taking the reigning place. In 2017, two in five consumers, or 40%, would use or have already used their smartphone to complete a purchase. And, the percentage of consumers that have made a mobile payment went from 30% to whopping 74%.
Accordingly, with the new shopping trend, new payment methods are emerging. Although mobile shopping is a potential driver of credit card usage, it seems that mobile payments will overtake the throne in the near future. The credit card usage is expected to drop to 46% by 2019. The mobile wallet systems like Alipay, Tenpay, and PayPal, as well as apps like Google Wallet and Passbook, improve the whole shopping experience. They improve the way consumers pay for goods and services and now more than ever, shoppers reach to their smartphones to pay instead for their credit card. Mobile wallets have all your credit cards on disposal but offer a more convenient way of buying and easier management of options.
Mobile wallets are by far the safest payment option. Each transaction gets a unique ID number to which retailers don’t have access. The account information doesn’t store on the user’s phone and everything you want to save can be encrypted, accessed only with password or fingerprint.
While mobile payments will ease the process and increase the protection for consumers, they are a potential gold mine for the sellers. Some of the leading companies like Starbucks and McDonalds are already uncovering the full potential of mobile wallets. The greatest advantage is the shortened path to purchase they offer which may increase the conversion rates by 50%. Similarly like when using credit cards, people tend to spend more when using mobile wallets. Shoppers don’t get the actual feeling they are spending money when they don’t pay via cash or card. The one-touch payment systems simplify the checkout process into a button press which turns into increased conversion optimization.
Although digital wallets are still work in progress, mobile payment is expected to hit $142 billion by 2019. One thing remains certain – the one touch payment enables an easy checkout and frictionless payment process for the shoppers, which in return, increases conversion rates. They present an important opportunity for the sellers to deliver better customer experience.