Mobile Payments: To Invest or Not to Invest?

Written by Natasha Janic on July 15, 2019

As humans, we’re all tempted by shiny new objects. As consumers, that can be the newest iPhone (that functions a lot like the last one that was released). As marketers, that’s often new, innovative products that are meant to improve the customer experience, such as artificial intelligence, mobile apps and mobile payments.

That’s not to say that some of these shiny new objects aren’t extremely useful. For example, the camera on the most recent iPhone takes incredible photos that makes purchasing actual cameras unnecessary for many consumers. Artificial intelligence has the potential to streamline the world. Mobile apps provide a new channel for communication and personalization through geo-location functionality. But what about mobile payments?

To start, let’s review some technical definitions. Mobile payments are made using mobile wallets such as Apple Pay, Samsung Pay, Chase Pay and Google Pay. Some retailers have developed their own branded mobile wallets, such as Target and Starbucks.

A Slow Crawl

While mobile payments were meant to make life easier for both consumers and retailers, the adoption can be described as slow at best. This is particularly true for Apple Pay, Samsung Pay and Google Pay, which can only be used on iPhone, Samsung and Android devices, respectively.

Apple Pay has the highest rate of adoption with 13% of iPhone users having used it at least once. The barrier to entry is linking a credit card to a mobile wallet with no clear benefit other than not having to carry a physical card around. In addition to this, at the end of 2018, only 50% of retailers were equipped to accept Apple Pay (the most widely accepted mobile wallet). By 2020, approximately 70-80% of retailers will accept most major mobile wallet providers.

Retailers Take an Alternative Route

With mobile payment adoption being lukewarm at best on both the retailer and consumer side, a handful of retailers have taken alternative routes to adoption. One of the first, and most successful, examples of a branded mobile wallet was introduced by Starbucks in their mobile app where a rewards member can link a payment method to “pre-load” money onto a virtual gift card, which was similarly adopted by Dunkin’ as well.

Target pushed adoption of their REDcard by including it as the only acceptable payment method within the Target app. However, they did combine their Cartwheel app, which allows customers to save exclusive coupons and deals, with their main Target app so that customers can now process their payment, coupons and receive the REDcard 5% off savings in one scan.

In contrast, Walmart’s mobile wallet allows customers to add any type of payment method to the mobile app to speed up the checkout process and has seen a high adoption rate despite not offering many other “perks” for participating.

Convenience retailer Cumberland Farms introduced their SmartPay app, which in addition to mobile payment, allows customers to save on gas and earn rewards by linking their checking account or prepaid card.

Things to Consider When Planning for Mobile Payment

The first step is having an understanding of your customer. Oftentimes, when retailers embark on their version of “digital transformation,” it’s tempting to want to bake all of the bells and whistles into the customer experience. However, the time and financial investment for many of these endeavors, such as a mobile app and mobile payment, can be quite high so understanding whether your typical customer is likely adopt your branded mobile wallet prior to investing is crucial.

The rate of adoption for standard mobile wallets (Apple Pay, Google Pay, etc.) will remain pretty tepid over the next few years, so the retailers who are creating branded mobile wallets could be on to something. A major sticking point in those cases comes from added value props, such as access to a loyalty program or exclusive discounts and personalized experiences. In addition to this, having a loyalty program linked to payment creates a really convenient checkout process for customers.

The combination of an improved customer experience and a more convenient shopping experience can help you catapult your customers over the barrier to entry: setting up mobile payment within your mobile app in the first place.

That’s probably easier said than done. Having a great customer experience across a branded mobile wallet, mobile app and engagement/loyalty program requires providers that can work well together, meaning their platforms should be flexible and built for integration.


Mobile payments aren’t going anywhere, but they aren’t really going anywhere either. Adoption has been slow unless it’s folded into a branded mobile wallet.

Questions to ask yourself before investing in mobile payments:

  • What do I know about my customers? Do I understand whether they would adopt mobile payments?
  • What are the added value props for using my branded mobile wallet?
  • Do I already have a mobile app? Will it be easy to integrate mobile payments?
  • Do I have an engagement/loyalty program? How can I leverage this to boost mobile payment adoption?