KEY POINTS

  • In our latest US in-store mobile payments forecast, we find that volume will reach $75 billion this year. Weak consumer interest and stumbles by major providers like CurrentC have resulted in slower uptake in mobile payments usage than previously expected. Our earlier estimate anticipated that US mobile payment volume would reach $129 billion this year.
  • While growth will be slower than anticipated, we expect volume to pick up significantly by 2020, reaching $503 billion. This reflects a compound annual growth rate (CAGR) of 80% between 2015 and 2020. At the end of the forecast period, we expect mobile payments volume to account for just over 8% of total in-store US retail volume.
  • More than half the US population will test out mobile payments by 2020, but engagement will remain fairly low for the average user. The portion of the US consumer population making a mobile payment at least once a year will expand from nearly 11% in 2015 to 56% by 2020.
  • No mobile wallet is a hit so far. While Apple Pay has generated a lot of buzz, most surveys indicate lackluster adoption of its in-store capability. Nor have consumers embraced Samsung Pay, even though it works with most terminals in the US. 
  • Consumer interest is the primary barrier to mobile payments adoption. Surveys indicate that the issue is less the mobile wallet itself and more that people remain loyal to traditional payment methods and show little enthusiasm for picking up new habits.
  • Integrated loyalty programs and other add-on features will be key to mobile wallets taking off. Consumers are showing interest in wallets with integrated loyalty programs. Other potential add-ons, like in-app, in-browser, and P2P payments, will also start fueling adoption. This strategy has been proved successful in China with platforms like WeChat and Alipay. 
  • Among merchants, security will likely motivate broader adoption. Although EMV is helping to tighten security for in-store transactions, it's not a perfect solution. The prospect of avoiding security breaches could drive wider merchant adoption of Apple Pay and other mobile wallets that rely on tokenization, which more effectively protects customer data.  

Introduction

Although the mobile wallet ecosystem is maturing, in-store mobile payments haven't yet taken off. Awareness of mobile wallets is high — 84% of iPhone 6 users were aware of Apple Pay as of December 2015 — but consumer disinterest, coupled [...]