Apple Pay suffers as merchants get choosy about digital wallets
The advancement of digital wallet technology in the past five years may be having a numbing effect on merchants, as new research indicates several major mobile wallets are losing momentum.
Rather than pile on more wallet options, businesses are pondering whether to create applications with embedded payments, establish a mobile browser or continue to use their e-commerce platforms as a browser. This is causing merchants to abandon big-name wallet apps in favor of brands that have more history behind them.
The percentage of e-commerce merchants accepting Apple Pay in 2018 is down to 35% from the previous year's 48%, while Google Pay is down to 25% from 38% a year earlier, according to Kount's annual Mobile Fraud & Payments Survey. Kount provides the survey, along with partners The Fraud Practice and PayPal's Braintree.
"The Apple Pay drop is pretty significant, but I believe the folks at Apple are putting a lot of eggs in the at-store basket, pushing it more at the physical POS and maybe neglecting the online market a bit," said Don Bush, vice president of marketing at Kount, a provider of e-commerce fraud prevention and risk management.
However, support for PayPal increased from 48% to 64%, while the share accepting Samsung Pay, Visa Checkout, MasterPass and Chase Pay all stayed even or within 2% of the previous year. Samsung Pay fell to 14% from 15%, Visa Checkout grew to 28% from 26%, Masterpass stayed at 8%, and Chase Pay at 6%.
American Express Checkout enjoyed the biggest gain in support among the bank-supported brands, growing acceptance to 16% from 9% of merchants.
"It's a case where merchants are saying Apple has 800 million user accounts, so we'll put Apple Pay on our site," Bush said. "But when they don't see a lot of consumer acceptance, they know PayPal has been there for years, so let's just go back to that."
Today's e-commerce merchants are looking at as many as 270 different digital payment types worldwide, depending on regions and countries, he added.
"What is starting to happen for online folks is they know they can't put 20 different payment logos on their site," Bush said. "That is confusing to the consumer, and their payment processor probably doesn't accept all of them anyway."
Kount, of Boise, Idaho, surveyed 600 e-commerce merchants in compiling its sixth fraud and payments survey. For the third straight year, the company noted "signs of complacency and even regression in terms of managing mobile fraud risk," Bush said.
That, in part, explains the slip in mobile wallet acceptance. Since 2013, Kount's data indicates merchants have steadily reported an increase in awareness of mobile fraud risks, but about 35% of them still do not track mobile fraud or do not know whether fraud attempts increased or decreased last year.
Only half of the merchants surveyed said the mobile channel requires additional or specialized fraud tools, the lowest level in six years of the study.
The advancement of multichannel merchants — those with storefronts, websites and apps — is causing some consolidation of payment options, Bush said. "It's a new market, and everyone jumps in with both feet, then all of the sudden there is consolidation and 95 payment types transforms down to eight types because everyone in the market is not going to make it."
Visa and Mastercard were seeking, at least in part, to diminish the potential for merchant or consumer confusion when exploring how to share a single pay button on e-merchant checkout pages. The other motive was to develop an option that could compete with any other button available to merchants.
Whether that can tidy up an e-commerce checkout page isn't entirely clear at this point, but merchants are definitely holding off on certain additions. Meanwhile, consumers are still expressing demand in mobile and brick-and-mortar channels.
In its Consumer Expectations in 2018 report, consumer engagement digital services provider Avionos found that 63% of consumers prefer to purchase big-ticket items in a store, and 52% prefer researching those products on desktop or mobile devices.
At 42%, many also expect technology like artificial intelligence to streamline faster online checkouts during their shopping experiences and boost security in the process.
With that sort of backdrop, merchants can't ignore the growing use of multiple retail channels, even if the effort to accept mobile wallets and bottle up a site with payment buttons has its downside.
Social media is proving to be an active commerce channel, as even though 60% of consumers said they have never purchased a product promoted by a celebrity or social influencer, more than half at 55% have made a purchase through a social media channel such as Facebook, Instagram or Pinterest.
Avionos surveyed 1,409 consumers about their online shopping habits, preferences and expectations in the year ahead in compiling the report.