Plastic, it seems, is powerful.
According to a 2014 TSYS online survey of 1,000 consumers who owned both a debit and credit card, plastic was far and away the most preferred payment type: 78% of respondents ranked either debit or credit cards as their preferred payment type.
But this survey occurred in a world before Apply Pay, the first mobile wallet, which launched October 2014 — and counted many credit unions as its first adopters. Surely payment preferences have changed in the past two-and-a-half years? After all, roughly three-quarters of Americans now own a smartphone.
As it turns out — maybe not.
The most recent of several consumer studies published by PYMNTS/InfoScout on mobile wallet adoption included 7,655 consumers who had the ability to use a mobile wallet (either Apple Pay, Android Pay, or Samsung Pay) found that more than 40% of each user group reported being satisfied with how they were paying already.
Drill down deeper, and the usage rates for the four most widely used mobile wallets further the story.
At the time of the poll in March 2017, 21.9% of respondents had tried Apple Pay — making it the most popular service in the study. Samsung Pay (14.6%), Walmart Pay (14.5%), and Android Pay (9.7%) round out the top four.
However when it comes to the miniscule adoption rates of the services, Samsung Pay ranks first. PYMNTS/InfoScout says 4.7% of respondents reported using Samsung Pay in an in-store transaction where they could, compared to 4.0% for Apple Pay, 3.3% for Walmart Pay, and 1.9% for Android Pay.
For Apple Pay, these figures represent a continued downward trend.
In March 2016, Apple Pay’s usage rate peaked, at 5.9%. That was five months after the product’s release. That two years later the usage rate has fallen by more than a percentage point.
Apple Pay’s competitors, though, have experienced differing growth trajectories.
Samsung Pay and Android Pay were both launched in September 2015, though the Samsung product has seen greater gains in use over its first year-and-a-half. Six months after introduction — reported in an earlier version of this survey — Samsung Pay had an adoption rate of approximately 1.5%, while Android Pay’s was just south of 1%. So while Android Pay has sputtered, Samsung Pay has made exponential gains.
Walmart Pay remains an unknown. The retail giant’s service launched in July 2016, and this is the service’s first inclusion in a PYMNTS/InfoScout study. But even at the eight-month mark, Walmart Pay’s percentage of respondents that have tried the wallet and adoption rate outpace the marks posted by its three chief competitors. While that’s impressive, more time in market will paint a clearer picture to the utility of the service.
On the credit union front, mobile wallet CUSO CU Wallet was purchased by CU Solutions Group in December 2016 and subsequently rebranded as LifeStep Solutions in February 2017. While the mobile wallet had not yet gone live at the time of the acquisition, its purchase may signify its continued viability to the credit union industry.
But right now, based on the results of the study, users believe they have better options.
Per the study, respondents identified the largest barriers to use as follows:
22.3%: I didn’t want to use mobile pay for this transaction
18.4%: I paid with/wanted to use cash
15.1%: I’m not yet comfortable with how to use it
10.7%: I get rewards or points for using a different payment method
10.3%: I forgot how to use it
While it’s maybe a little disconcerting that some users still don’t feel comfortable or remember how to use the technology, it’s ultimately something that can be trained. However, more concerning for mobile wallet providers are the number of respondents who actively didn’t want to use the technology or preferred to use cash. These are the users that the providers need to grow adoption rates.
To do that, mobile payment providers may have to provide an incentive for consumers to use their product — like many financial institutions do with their credit cards. After all, one of the surest ways to change consumer behaviors is to establish an advantage in both convenience and value.
For now, mobile wallets are not providing enough value. But it’s still early. Mobile wallet providers will continue to evolve and add functionality in the years to come.
So maybe mobile wallets haven’t killed the credit card yet. Then again, maybe we should focus on cash first.