The Great Payment Battle Is Underway

There’s a battle waging. It’s taking place between­­ ­payment types and the key players involved are traditional plastic cards, digital in-app payments, mobile wallets and contactless cards.

With Christmas approaching and Black Friday and Cyber Monday behind us, which of these competitors is emerging victorious? Statistics from this vital shopping season are now filtering through and patterns that help us predict the way the battle will end are being revealed.

Payment technology companies and high street business owners are fervently reviewing the data. They know that shoppers spent a lot of money, but it’s how they spent that money that they will find particularly interesting. It is this information, more than the volume of pounds and pence that will influence the way stores prepare their businesses for next year’s event.

So, what have they found?

As was expected, consumers are increasingly turning to the internet to complete their Christmas season purchases; this year’s Cyber Monday set records for mobile-based, remote payments - which includes in-app spending. In the US alone, consumers spent $6.59 billion online, a 17% increase on the year before. Of this, $2 billion was mobile based. According to a survey from Deloitte, 40% of consumers anticipate engaging with a retailer’s app during their Christmas spending spree, meanwhile Retail Dive noted that 51 percent of consumers want to use a retailer’s app for faster purchases.

Looking in-store, the message was less clear. Following Black Friday, Cayan revealed that on the day, only 1% of the spend at its retail partners’ stores was attributed to mobile wallet payments (meaning, Apple and Android Pay, and of course their competitors). Given almost every adult in the Western world has a smartphone capable of handling mobile payments, should we have expected this figure to be higher? Can businesses confidently predict further adoption of the technology in 2018?

When contactless was initially released, adoption was slow. Now though, 20% of payments under £30 in the UK are now made using contactless cards. Use is highest in the cities; outside of places like London, such payments have been slower to reach the mainstream than one might have thought.

It seems that, leading the pack is mobile spending, a significant part of which is in-app payments.

What is it that consumers seem to love about in-app payments? Unlike web payments, they are very easy to manage. In a web browser, customers are made to re-input personal information with every order. This annoyance, alongside lengthy checkouts, cause customers to abandon their baskets. When this experience is replicated in a bad mobile app a huge 86% of people to abandon their mobile baskets.

Any good app will allow the user to select and complete purchases, including payment, without going through the process again. If the customer is nervous about security they can add passwords to their mobile device, fingerprint, or even retina authorisation.

Yet, while customers seem to be backing in-app purchases for the win, something seems to be holding businesses back from giving those customers what they want. Could the concern be the up-front investment? After-all, without knowing the long-term winner of the payment scrimmage, money placed down on one side could potentially be wasted. If this is the reason, then clearly the answer is education.

Businesses owners need to be shown the benefits of taking mobile payments and that there are plenty of cost-effective options available. The cost of an investment in a mobile ordering app is now so small, that the risk is near negligible. With some vendors only asking for monthly subscription payments, rather than up-front development costs, the risk is lowered even further.

Who’s in charge of the educating process? It’s up to the technology suppliers and to an extent, the customers. The messages to communicate are simple: mobile payments are as safe and easy to take as cards. Customers love to pay via mobile, and, in the battle between payment solutions, in-app payments are laying waste to the rest of the field.

As with all new technologies, it takes time for the early adopters to persuade others of the benefits of a technology. However, once that happens and the security concerns are settled, I don’t doubt the uncontested victor will be in-app payments.