It’s interesting, but while plenty of Americans have smartphones, their use of smartphones to make payments is actually somewhat behind the rest of the world. However, some new studies presented by The Economist suggest that this may just be a temporary issue, and that mobile payments in America are really catching on.
One projection notes that, by 2022, contactless payments will make up about a third of all electronic payments in the US. What’s more, mobile payments will hit $282 billion by 2021, which is three times what they were in just 2016.
Big gains, especially considering the primacy of cash in the US. Right now, word out of the Federal Reserve Bank of San Francisco says that nearly a third of all US consumer transactions are cash. When compared to other countries, Americans’ mobile payment use is a drop in the bucket; China’s mobile payments industry is over 50 times that of America’s, and the Chinese never really took to credit cards.
Naturally, security is still balking many American mobile payments users, with over half preferring cards to smartphones on that basis. Improvements in mobile security haven’t had much of an impact as yet, which is actually unexplainable.
I, however, can try. Basically, the security advancements might be too new to have much effect. We’re seeing a lot of mobile payments gains thanks to mobile order-ahead systems and the like. Just look at Starbucks, and if Starbucks isn’t enough, check out the growing string of fast-food and fast-casual places that are adopting mobile order-ahead. This is going to be one of the big drivers in mobile payments, but even with that, credit cards will likely still have pride of place. After all, a lot of mobile payments platforms depend in tying in a card of some type—credit or debit—to use, so much of this traffic will still have at least a stop with a credit card.
Sure, mobile payments are catching on. But many are used to cash, and likely won’t switch without a clear reason to do so. The gee-whiz factor of mobile payments just isn’t that strong, and if mobile doesn’t want to be fourth-fiddle forever, it needs some compelling reasons to get users behind it.
Ellie Dautner, a finance postgraduate from the University of San Diego, is an expert journalist in fintech and mobile payment technology. She specializes in writing about fintech, mobile payments, startup funding, and acquisitions.