When it comes to mobile payment, Americans are notoriously slow adopters. Here’s why:
- We don’t think they’re secure: More than half of American consumers still prefer plastic to smartphones because of perceived security and privacy concerns.
- We don’t see the benefits: 65% of consumers don’t see any benefit to paying with a mobile wallet.
- Our merchants haven’t transitioned: In 2017, only 37% of merchants in accepted Apple Pay or PayPal and just 29% accepted Android Pay.
The Digital Payments Scene in the East
While Americans are slowly beginning to transition away from cash, plastic, and checks, mobile payment adoption is far behind our peers in markets like China and India. In fact, these countries are leapfrogging U.S. companies in popularizing mobile payments.
In China especially, scanning QR codes has become the cultural norm, and the prevalence of mobile payments is driving new innovations in payment solutions. Over the past few years, the Chinese mobile payment market has experienced explosive growth. Its volume in 2018 was more than $5.5 trillion, 50 times greater than mobile payment volume in the U.S. And as China’s two major players in the space, Alipay and WeChat Pay, begin to reach market maturity, competition for dominance and growth in a shrinking pool of new users/merchants is driving evolution.
One example is Alibaba’s Huma supermarket (Alibaba is an affiliate of the holding company for Alipay) where every product in the store is scannable. There are QR codes on EVERYTHING – including the individual crabs for sale in its meat market tanks. Shoppers can research where the food is from and add it to their favorites, and add it to lists to re-order again from home. Additionally, the stores integrated Alipay app records what people buy most often and can then make personalized recommendations for other products they might be interested in.
Beyond QR Codes
But the advancements aren’t limited to mobile payments. In fact, Chinese companies are introducing entirely new ways to go cashless. For example, in the past year both Alipay and WeChat have launched facial-recognition payment systems.
These systems can be placed at the point of sale and scan shoppers faces for payment. Alipay and WeChat are marketing these screens as a way to speed up sales and improve efficiency. They also offer an alternative to one of the biggest challenges of mobile payments – a dead phone battery.
The Matter of Privacy
One factor driving the difference between mobile payment adoption and innovation in East versus the West, is the way each region treats privacy. In China, the government is notorious for its citizen surveillance. As a result, privacy isn’t as much of a concern to Chinese consumers as it is for users in the West – particularly the United States and Europe. In practice, this has enabled Chinese companies like Alipay, WeChat and others to gather huge amounts of consumer data and use this data to build much more robust payment environments, and target consumers in a way previously unthought of.
The West’s Future
So are we all headed toward the Chinese model of mobile payments? Maybe. But today, the most important thing for U.S. companies to know is that mobile payments aren’t going away – they’re not simply a fad. In fact, if the research is correct, the mobile payments market will continue to swell well into this century. U.S. companies have to start taking the integration and promotion of mobile payment options more seriously.
Marketing Strategist, busy mama, & blogger extraordinaire