With more consumers owning smartphones than ever before, the digital commerce landscape is rapidly expanding. A recent whitepaper from Discover® Global Network explores this changing landscape.
Titled “How Enablement Drives Growth in Digital Commerce,” the whitepaper covers how smartphones are enabling consumers to research products online, compare deals, and complete transactions through their phone.
Based on these trends, the whitepaper’s forecast of digital commerce expansion is striking and straightforward; digital commerce will expand greatly within the next four years. The number of digital commerce transactions are going to rise from 45.3 billion in 2018 to 92.8 billion in 2022, and as the number of transactions increase, so, too, will the total volume of money spent, rising from $1.9 trillion in 2018 to $3.1 trillion in 2022.
Smartphones: ubiquitous and convenient
Such stunning growth is a product of two trends: the ubiquity of smartphones and consumers’ desire for a more frictionless, omnichannel payment experience through their mobile device.
The number of consumers with mobile phones is hardly shocking, but the data on device ownership might surprise you: 95 percent of Americans own a mobile phone and roughly 80 percent of those are smartphones.
Smartphones provide people with a convenient way of shopping and making payments, and people are increasingly using them in this manner. During 2019, for instance, an estimated 61.6 million Americans are expected to make mobile payments. The widespread use of smartphones will also impact the ecommerce space, as 54 percent of all ecommerce sales are expected to be completed on a mobile device by 2021.
Transcending a single merchant vertical or channel
Smartphones can break down traditional merchant verticals and channels. As smartphones increasingly become a conduit for consumer behavior, consumers are becoming familiar with, and desirous of, an integrated shopping experience.
Previously, the commerce landscape was usually viewed as three distinct areas: in-store, online, and mobile. People either bought something online, or they went into a store to make a purchase. Now, however, these categories are becoming mixed.
Consumers can research a product on their phone, purchase the product on their laptop, and then head to a store for an in-store pickup. Such an arrangement is actually rather common: 65 percent of American consumers reported making at least one remote order and pickup purchase in the past year.
Even prepaid cards are being impacted by mobile habits. The majority of people are opting to redeem their gift cards online as opposed to in-store: 63 percent of consumers choose online gift card redemption over the in-store alternative.
This statistic is important for merchants to consider because four in five consumers who paid for goods and services with their mobile device bought a prepaid card within the past year. And they are also more than twice as likely as average to buy and receive virtual prepaid cards through a mobile app, meaning that this type of consumer is more likely to spend and redeem digitally.
Also important is that Generation Z favors prepaid use even more, with 68 percent of 18-to-24-year-olds purchased prepaid cards in 2018, including reloadable prepaid cards, gift cards for online services, and transit cards.
As the whitepaper notes, “The data suggests that among the young and mobile-enabled, the smartphone is becoming the desired point of contact for both prepaid purchases and redemption transactions.”
Another area where smartphone ubiquity is changing the payment landscape is with how people pay. Payment applications, such as Google Pay or Apple Pay, are being used by 25 percent of smartphone users. And the use of service-oriented apps, such as Uber, is widespread, with three in 10 smartphone owners utilizing them.
Beyond the adoption of mobile payment or service-apps, there are other emerging merchant-based apps. Many companies are making their own apps where customers can make an account, place and pay for orders, and earn and redeem loyalty rewards. Merchant wallets are becoming very popular due to their convenience and rewards offered. For example, 24 million people made a point-of-sale purchase using the Starbucks merchant wallet in 2018.
The allure of these apps is likely the convenience they provide. Mobile wallets enable consumers to pay with ease, while service-oriented apps allow people to get services they need, be it a car ride through Uber or movie tickets through Fandango, with a few taps of the finger. As people become accustomed to this convenience, they will expect it in all areas of commerce.
Consumer behavior is clearly being impacted by the ubiquity of smartphones and the convenience they provide. Businesses hoping to capitalize on this opportunity should offer consumers what they want. Businesses should consider having their own mobile apps with payment or loyalty functionality.
Platforms such as Discover® Digital Exchange (DDX) help businesses offer these much sought after services. By using platforms like DDX, businesses can offer turnkey tokenization and wallet functionality to their customers, including bank and merchant wallets. DDX is compatible with Samsung Pay, Google Pay and Apple Pay, meaning that clients can accommodate various customer needs and preferences. It’s almost important to find platforms that not just support current technology, but are also adaptable enough to accommodate future technological innovation.
As smartphones continue to drive consumer behavior, businesses need to keep up by offering a seamless and dynamic commercial platform for their customers. If not, customers will find a business that does.
To learn more about how mobile devices are changing e-commerce, contact Discover® Global Network at PrepaidSolutions@Discover.com.
 Juniper Research. “Digital Commerce: Key Trends, Sectors & Forecasts 2018-2022,” Juniper, June 2018.
 Pew Research Center. “Mobile Fact Sheet,” PewInternet.org, February 2018.
 McNair, Corey. “Global Proximity Mobile Payment Users,” eMarkter.com, December 2018.
 CBRE. “What is the Role of M-Commerce in Retail Sales?”, CBRE.us.
 Mercator Research. “Consumers and Prepaid: Shifting Towards Digital,” Mercator Advisory Group, September 2018.
 Mercator Research. “Mobile Payments: Still Waiting for Broader Adoption in the U.S.,” Mercator Advisory Group, November 2018.
 eMarketer. “Starbucks App Leads Mobile Payments Competitors,” eMarketer.com, May 2018.