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Data for today’s episode is provided by Mercator Advisory Group’s report – Asian Mobile Pays Continue High Growth, But U.S. Market Expansion Stalls
Mobile Adoption Is Slow in the U.S., but Increasing:
- A 2019 Mercator Advisory Group report found that 32% of consumers have used a universal mobile app.
- While mobile has seen a bump recently due to COVID-19 safety concerns and POS terminals, mobile transactions are far from the norm.
- Mercator has found that 11% of universal mobile app users in the U.S. have begun to use the app only since the onset of COVID-19.
- Plastic card use continues to expand, not diminish, as consumers appreciate the familiarity, convenience, and rewards associated with card transactions.
- Mastercard and Visa note in their financial statements that the number of debit and credit cards grew by over 5% in the U.S. from 2018 to 2019.
- According to Mercator, 39% of consumers reported they made a purchase via a mobile phone (either online or in-store) in 2020, compared with 34% in 2019.
Mega payment apps Alipay and WeChat pay have been gaining traction in the U.S. market through availability at thousands of merchants. COVID-19 plus trade tensions and politics have put an abrupt end to the stream of travelers from China to the U.S. who would use these acceptance locations with their homegrown mobile apps while on vacations, business trips and traveling to the states for academic reasons.
“The Asia Mobile Pays had gained a foothold in the U.S. in-store payments market, until their key target market—Chinese visitors to the U.S.—collapsed. Now that U.S. merchants have seen the cost benefits and purchase transaction simplicity of Alipay and WeChat Pay, they will be looking for the payments industry to bring similar ways to pay to their stores”, comments Ray Pucci, Director, Merchant Services Advisory Service at Mercator Advisory Group and co-author of the report.
These mobile payment services are available only to Chinese nationals and are not a direct challenge to U.S. card networks and issuers, but the similar use of QR code based mobile payments, integrated within a retail app, is beginning to emerge through pilot programs, giving a glimpse of what may come.
“With very low processing costs, quick receipt of deposits and no chargebacks, this payment solution has a lot of appeal to merchants, particularly smaller merchants. Card is still king in many economies and toppling rewards and consumer protections will be a tall order, but apps influenced by the successful Chinese brands will pull some transactions away from traditional payment types,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and co-author of the report.