In mobile payments, small numbers tell big stories
Looking at the rise in issuers that support mobile wallets, one might think the concept has finally gone mainstream. But the actual usage numbers remain dismal, with few indications of what — if anything — will steer the market toward mobile payments.
A recent study by the Pulse Debit network conducted by Oliver Wyman provides the somewhat grim details, as well as some insights as to which mobile wallet maker's strategy is working.
Support for the 'Pays'
As Apple Pay, Android Pay and Samsung Pay have added banking relationships across the U.S, the ability to link debit cards to mobile wallets has increased dramatically. In 2015, just 30% of debit cards could be loaded onto these three mobile payment platforms. By 2016, this had more than doubled to 65% of debit cards and, as of January 2017, this had extended further to 74% of U.S. debit cards.
Apple Pay is the most popular mobile payment brand, with 74% of issuers supporting this platform. Both Samsung Pay and Android Pay lag behind, but are still in the majority — just 55% of financial institutions support Samsung Pay and 51% support Android Pay. This gives consumers at most institutions one or more options for making a mobile payment. The big question is whether people are following through, and whether those numbers are growing fast enough to make sense for banks and merchants.
Adoption vs. usage
Apple is ahead of the competition in terms of debit cards loaded onto mobile wallets — in 2016, just 3.5% of debit cards were loaded into Apple Pay. In 2017, this had nearly doubled to 6.3%. The news for Samsung Pay and Android Pay is less impressive. Adoption for both has grown from just 0.2% in 2016, but not much. In 2017, 0.8% of debit cards were loaded into Samsung Pay and 0.6% of debit cards were loaded into Android Pay wallets.
But there's a different story in how consumers actually use the wallet apps once they've enrolled.
A surprising finding was the frequency of transactions made using Samsung Pay. According to the study, users of Samsung Pay would perform on average 1.3 transactions per month. This is more than double the frequency of Apple Pay (0.6 per month) and Android Pay (0.7 per month). While no data was provided on what may have been behind this finding, it can be surmised that this is attributable in part to the more universal acceptance capabilities that Samsung’s proprietary MST technology, which enables consumers to make contactless payments at magstripe terminals that don't support NFC.
Samsung Pay has also been heavily promoting its loyalty program that provides rewards on top of those consumers would already earn from the card linked to their mobile wallet. Samsung also controls a sizable chunk of the Android smartphone market, giving it a more prominent role among Android devotees.
Mobile is a drop in the debit ocean
At 6.3% card enrollment and 0.6 transactions per month, it is estimated that Apple Pay accounts for 0.19% of all debit transactions. Despite Samsung Pay's higher per-user usage, it contributes to just 0.05% of debit transactions because fewer consumers are enrolled overall. Android Pay contributes the least to the overall share of debit transactions, at just 0.02%
While the data lays out a huge disparity between the hype around mobile payments and the actual usage in the real world, the industry remains bullish on the longer-term opportunity. The raw numbers from Pulse point to lukewarm adoption by stakeholders, but at least the trends are starting to take shape.