Increasing Adoption of Mobile Payments: Here’s How Digital Banks Can Help

Americans use their Starbucks app more than they use any mobile wallet, including Apple Pay. This begs the question: why are Americans so reluctant to adopt mobile payments?

Kenya, India, and China all surpass the U.S. in mobile payments (or m-payments) in terms of use and transactions, despite America’s reputation for early mobile adoption. Kenya’s largest m-payments provider, M-Pesa claims it handles transactions worth 43 percent of Kenya’s GDP. In China, $12.8 trillion worth of m-payment transactions were processed in 2016, compared with a mere $49.3 billion the same year in the United States. India, likewise, saw m-payment adoption skyrocket over the past few years: 41 percent of Indian Internet users reported using an m-payments service in the past month, as compared to just 27 percent of North American users.

When looking at the m-payment systems in these countries, it becomes rapidly apparent that m-payments have the potential to be significantly more seamless than plastic (America’s preferred payment method). But there’s one major factor holding America back: most financial institutions have not yet optimized their mobile experience, which has bred consumer distrust over mobile payments.

To move the U.S. into the next era of currency exchange, financial institutions need to invest in the mobile experience.

What a Truly Seamless Mobile Experience Looks Like

In the U.S., payment services and mobile banking experiences work as appendages to traditional banking, not as truly mobile-centric products. M-Pesa serves to highlight this discrepancy: the service works directly over mobile phones, turning phone accounts into bank accounts for virtual currency, and then allows users to send money as they would send a text. Unlike American m-payment systems, users do not need to even own a smartphone to use virtual currency on the go.

Similarly, India’s PayTM uses a QR code system to allow users to make bill/rent payments, buy movies, and even do in-store payments at grocery stores, restaurants, parking structures, and pharmacies. The company stated that over seven million offline merchants across India use this QR code to accept mobile payments directly into their bank accounts.

Like India and Kenya’s systems, China’s AliPay and WeChat provide consumers with systems that seamlessly integrate into the ways in which they already use their mobile phones. These two payment providers, which account for over 90 percent of transactions in China, allow vendors to use them by having users scan a QR code on a POS, or even just by printing a piece of paper with a QR code, which the shopper then scans. The price of entry for vendors and users alike is extremely low.

These three countries demonstrate how payment providers can offer an experience that provides less friction for both vendors and users than traditional payment methods. So how can American banks do the same?

How American Banks Can Catch Up with Mobile Payments

Most U.S. financial institutions haven’t optimized their mobile apps for a full service experience. While Apple Pay and Venmo Integration for Business are a big step in the right direction, the vast majority of m-payment providers lack integrations and full-service experiences. For instance, users cannot make payments via iMessage or text message very easily, and making payments to vendors online and in-person still requires putting in a laborious amount of information or using physical cash or cards (with the exception of those that have adopted Apple Pay and Venmo-like applications).

As the three examples outlined in this article demonstrate, integrating messaging into the financial experience is paramount to garnering widespread adoption, as is lowering barriers to entry for vendors and consumers. Payment providers in Kenya, China, and India all built out payment systems that integrated seamlessly with the ways in which users were already using their phones.

Whether it is through a brand’s own native mobile app or channels like Apple Business Chat, American brands can benefit immensely from providing a messaging-based payment experience.

Mobile banking can be as easy as sending an iMessage to a friend or a Slack to a coworker. Setting up m-payment acceptance as a vendor should be as simple as printing out a piece of paper. Vendors and consumers alike need to be able to access mobile banking for all of their everyday needs — from grabbing a coffee in the morning, to paying for parking during the day, to paying for dinner and a Lyft home at night. And they need to be able to perform these tasks as easily as they do everything else on their mobile phones.

Seamless m-payments is the next step in an overall trend toward end-to-end service interactions between brands and consumers. Brands that offer messaging and mobile-based service for the entire transaction lifecycle will gain consumer trust and see the same level of adoption that seamless m-payments in other parts of the world have already undergone.

Learn how leading fintech brands like Neon Pagamentos and Moneylion support their customers with a brilliant mobile customer service experience through Helpshift.

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