Why Apple Pay and Mobile Wallets Never Really Took off Despite All the Buzz Back in 2014

by Sarah Grotta 0

The buzz around mobile payments is beginning to wear off and the reality is sinking in. MarketWatch commented on a report recently published by Fitch Rating, that the market roll out of Apple, Android and Samsung Pay, the bank-based mobile wallets and merchant wallets are creating confusion, not demand to pay with our phones:

“…in-store mobile payments are expected to account for just 0.6% of the roughly $4.65 trillion in in-store sales expected in 2016, according to a report by eMarketer, cited by Fitch Ratings in a new note.

“Despite growing sharply off of a low base in recent years, consumer adoption of mobile wallets in the U.S. has developed at a much slower pace than most industry experts would have predicted,” Fitch director Michael Taiano wrote in the note”.
Over $4 trillion is not to be dismissed, but if you consider that the largest single contributor is the Starbuck’s app, not a multi-merchant wallet, then mobile certainly hasn’t lived up to the hype.

This analysis believes that there are three reasons for the lack of interest in mobile payments:

For merchants, there was no clear financial benefit that would outweigh the costs of accepting card payments, which include interchange fees and the costs of installing POS terminals.

Second, the proliferation of wallets has only created confusion at checkouts, as many are not equipped to accept them all.

The third reason is that consumers are more aware of and more wary of cyber risk, and not all are convinced that enhanced security features such as tokenization offers sufficient protection against attack.

The article doesn’t offer suggestions when, where or if mobile might break out in the U.S. In the meantime, more wallets continue to be introduced.

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group

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