UK outpaces US in mobile wallet usage

Mobile wallet usage is more widespread in the United Kingdom than in the United States, according to a new study published Dec. 22, 2017, by Auriemma Consulting Group, a boutique management consulting firm with offices in New York and London. Auriemma researchers attribute the disparity to the United Kingdom's broader adoption of near field communications (NFC), which has enabled tapping at the POS to become a mainstay for U.K. merchants.

Jaclyn Holmes, Director of Payment Insights at Auriemma noted U.K. consumers have been tapping at the POS since 2007. "Their increased comfort with this technology, in the decade since its inception, makes payment behavior at the point of sale less of a barrier for mobile pay adoption," she stated. "If anything, paying with a tap has become more natural for this population than their US counterparts, who only recently began the move from swipe to dip."

Holmes and her colleagues believe comfort with contactless technology is a key factor in driving mobile wallet adoption. As consumers acclimate to contactless technology at the POS, many will appreciate NFC technology's speed and ease-of-use, Auriemma researchers stated.

Key findings, indications

Auriemma's parallel studies were conducted online using a sampling of U.S. and U.K. cardholders. The U.K. study surveyed 500 cardholders in August 2017; the U.S. study surveyed 800 debit cardholders, 567 of whom were also credit cardholders, in June and July 2017. The study revealed the following mobile wallet adoption rates:

• Apple Pay: U.K. 12 percent, U.S. 9 percent

• Visa Checkout: U.K. 9 percent, U.S. 6 percent

• Android Pay: 4 percent in both countries

• Laggards: 31 percent of U.K consumers and 41 percent of U.S. consumers have not used their smartphones to purchase items on the mobile web.

• Mobile web and mobile wallet usage: 33 percent of U.S. consumers and 43 percent of U.K. consumers who made mobile web purchases by smartphone have also tapped their smartphones at the POS. This contrasted with 7 percent of U.S. and 5 percent of U.K. consumers who have not transacted on the mobile web or used a mobile wallet, researchers noted.

• Overall satisfaction: 90 percent of survey respondents in both countries reported high satisfaction rates with mobile payment applications. Researchers expect these groups to continue using their apps but noted they will have little to no impact on laggards who have yet to embrace the technology.

"Cardholders who are more accustomed to shopping on their smartphone are more likely to pay with their smartphone in-store, especially in the UK," Holmes noted. "The [United States] may have had the advantage of earlier exposure to mobile wallets, but the [United Kingdom's] history with contactless has made the locale ripe for adopting a variety of mobile payment options."

Drive or be driven

Apple Pay was launched in 2014, but researchers are not surprised by the slow adoption rates in the United States. Accenture identifies mobile wallet usage as one of 10 payment megatrends. The company predicts 64 percent of consumers will use mobile wallets in 2020. Its October 2017 report, titled Driving the Future of Payments: 10 megatrends, found consumers "desperate for a different breed of mobile payments options."

Report authors expect application programming interfaces and open banking to help drive mobile wallets and other consumer-focused payments experiences, by offering value beyond the transaction itself. This value may include immediate rewards, proactive balance alerts, data sharing and other benefits that leverage the mobile payments ecosystem, they stated.

"Today, bank mobile wallets have lower penetration among consumers (28 percent) than the both the Pays (Apple Pay, Android Pay and Samsung Pay) (49 percent) and merchant wallets (39 percent)," the authors wrote. "If traditional players do not think beyond the functional aspects of their mobile payments apps to create mobile experiences that engage consumers to do more—to get more value—Google, Apple, Facebook, Amazon and others will do it for them."

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