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Future of PoS: Mobile Wallets Find Their Home in the Future of PoS

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    Report

  • 19 Pages
  • July 2021
  • Region: Global
  • Arizent
  • ID: 5715060

Introduction

Since their introduction, mobile wallets have held the promise of representing the future of in-store point-of-sale (POS) transactions. Yet, time and time again, they have consistently under-delivered due to a lack of a clear user value proposition and low merchant acceptance rates. However, in one fell swoop COVID-19 changed everything.

Wallet adoption has been jumpstarted as consumers are finding them to be a safer way to pay and merchants have quickly expanded acceptance to meet growing market demands for contactless options. As a result, wallets are experiencing a surge in usage, particularly among Gen Z and millennials, thereby, cementing their role in the future of POS.

Key Findings

  • The consumer response to the pandemic has been dramatic - shopping less frequently in-store, more online and adopting a hybrid channel model. This has caused retailers to expand e-commerce sales, add curbside pickup and buy online/pickup in-store options, as well as to offer delivery services.
  • Consumers have also changed how they pay in-stores and for hybrid channel purchases with 21% of consumers changing their primary payment method altogether in just over a year’s time. Safety and convenience were top motivators behind this shift, forcing retailers to add card acceptance and to add contactless options where they did not exist.
  • Mobile wallets, which already had a moderate level of adoption prior to the pandemic, received a strong boost in new users and increased usage among existing users for both general purpose (GP) wallets such as Apple Pay and retail wallets such as Starbucks.
  • Half of consumers are now active GP mobile wallet users. The figure jumps to about two thirds for Gen Z and millennials, as well as more than half for Gen X.
  • There is a core set of mobile wallet payment “evangelists” who were hard core users before the pandemic and since COVID-19 this segment has expanded in size. Consumers are now more willing to attempt to use mobile wallets at retailers even though they may not be accepted. While safety and convenience have been key reasons for increased wallet usage, there are also consumers who want to “try out new payment trends” and are being incentivized by rewards and coupons for wallet usage.
  • The expansion and adoption of new contactless payments, self-checkout and checkout free technologies all serve to support the expansion of mobile wallets since they either leverage the same infrastructure, such as contactless cards, or are more reliant on mobile wallets, such as checkout-free tech where consumers “check-in” to a store using a wallet or scan items into a mobile wallet. Additionally, as checkout-free options expand they create an opportunity for mobile wallets to reimagine a consumer’s shopping and payments experience, much like Uber did with taxi cabs and rideshare.

Table of Contents

  • Introduction
  • Consumers are shifting from shopping in-stores to online
  • The shift in how consumers pay in-stores since COVID has been seismic
  • Almost 40% of consumers used mobile wallets before the pandemic
  • Younger consumers were heavy retail wallet users before COVID-19
  • Mobile wallet evangelists existed before the pandemic
  • One-in-seven Gen Z and millennials have started using mobile wallets since COVID-19
  • Safety and convenience were key drivers for increased wallet usage and adoption
  • Mobile wallet usage is up across the board since COVID-19
  • There is a significant group of consumers who would like to be mobile wallet payment-first
  • A quarter of consumers experienced non-acceptance in their contactless payment attempts
  • Contactless card adoption and usage is up since COVID-19
  • Consumers are showing strong demand for self-checkout
  • Conclusions