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Mobile Payments

The Mobile Wallet Landscape

Liz Smith
Vertical Solutions Manager, Sales Enablement
Executive Summary
Over 70% of merchants indicate that they will roll out mobile wallets over the next 5 years.

Mobile device usage by consumers has completely evolved the way we do business. From pre-ordering and paying at Starbucks, to a simple tap of your phone in a NY city taxi-cab, I don’t think anyone would argue that we are on the brink of a culture shift that is just starting. Fueled by the millennial generation (which is now ¼ of the U.S. population), today’s consumers are increasingly embracing mobile wallets. Millennials demand experiences, are plugged into their devices, and are disrupting traditional purchasing patterns. Digital wallets, on-demand apps, Bluetooth, and NFC are doing more than just improving the payment process, they are driving change; and this has implications for you as a merchant.

Mobile Wallet Usage by Age Group Chart
500 %
YoY increase in transaction volume

The Mobile Wallet Landscape

There are two types of mobile wallets - NFC and MST Wallets (wallet service providers) and Cloudbased Wallets (payment service providers). Both are payment apps housed on mobile devices (including smartphones and wearables). The most popular wallet service providers are Android Pay, Apple Pay, Samsung Pay and Microsoft Wallet; recognizable payment service providers include Alipay, Chase Pay, Paydiant and WeChat Pay. 

We are seeing a 500% year-over-year increase in transaction volume and projections are estimating that mobile in-store payment volumes will exceed $500 Billion by 2020 which begs the question, how will consumers use them and how will this affect you?


U.S. Proximity Mobile Payment Transaction Value Chart
Mobile wallet adoption is posed to increase from 16% to 41% over the next 5 years.

Consumer Benefits:

  • Consumers can store all valuables (credit/debit cards, gift cards, offers, and loyalty cards) in one place for easy usage at checkout 
  • Consumer convenience is increased: easy to redeem offers without bringing physical coupons/ loyalty/gift cards with them
  • Seamless, user-friendly, intuitive payment experience that speeds up the payment process
  • Discounts, promotional offers, rewards, and “deals”
  • Security, privacy, and reliability
  • Integration with banking services to better manage budgets and account balances


Retailers like Starbucks and Dunkin Donuts are winning over their consumers with their mobile wallets. What can we learn from them?


Merchant Benefits:

  • Loyalty programs will be a significant driver in retailer’s mobile wallet adoption. Starbucks and Dunkin Donuts have been able to leverage their loyalty programs to acquire mobile wallet users, which, in turn, has driven store traffic and conversion rates.

    • Merchant Use Case: Merchants can use mobile wallets as a channel to promote the merchant’s loyalty program or download their mobile app custom message/link can be added to digital receipt after every Android Pay purchase
  • With mobile wallet programs, sales are expected to grow at a five-year compound annual growth rate of 68%
    • Merchant Use Case: Merchants can build engagement and drive incremental visits -- deliver timely/relevant notifications to users when they’re nearby a store that they have a saved offer or gift card
  • According to the Business Insider 2017 Retail Mobile Wallets Report, adoption will begin to decelerate as a result of increased competition by 2020. As universal mobile wallet players begin to add effective loyalty programs and coupons to their offerings, adoption for retailer-based mobile wallets is likely to slow down because these offerings are their main marketing points
  • Merchants improve speed of service: offer redemption + loyalty conveyance happens in a tap (reduces time at checkout)
  • Merchants (store associates) receive more value / convenience: no extra tasks to be done to track offers, swipe loyalty or gift cards / maximizing loyalty utility (make sure all customers are using their loyalty ID for EVERY purchase)
  • Merchants can maximize usage of their cobrand card / PLCC - merchant-specific cards float to top of wallet for payment


Go-to-Market Strategy

With mobile wallets, merchants have the insight to assist the customer before, during, and after their experience, making the entire interaction frictionless while adding opportunities to upsell where appropriate. With that, here are the top 5 key factors to consider in your mobile wallet go-to-market strategy:


Consider reach and potential limitations: In certain markets around the world, usage is restricted to specific card brands, so check acceptance by market for each wallet you wish to implement. You will also want to check transaction limits per market. For example, Apple Pay allows your customers to make easy and secure contactless payments of any amount, but customers may be required to insert their card if either of these apply:

  • Your payment terminal or payment provider doesn’t support the latest network specifications, as with contactless debit and credit cards
  • The transaction amount is over 100 CAD in Canada, 20 EUR in France, 500 HKD in Hong Kong, 100 SGD in Singapore, or 30 GBP in the UK4


Understand security and compliance and fraud limitations: 

  • Security: Single-tap payment requires that the customer payment data needs be stored somewhere. So this begs the question, who stores it and is it secure? With Apple Pay, Android Pay and Samsung Pay, single tap payments are tokenized, encrypting the data so that it never touches the merchant’s system. Customer authentication is still required (pin or fingerprint), but this ensures the customer payment data is within PCI-DSS scope. With any mobile wallet, ensure that all payment data is encrypted and PCI compliant.
  • Fraud: Within stores, most mobile wallet transactions are treated in the same way as your current credit and debit transactions, but within apps and websites, liability for transactions might shift to the issuer. Contact your payment provider to learn how you can benefit from liability shift within your app and website.


Consider the Omnichannel Experience: Consumers today expect a consistent experience across all sales channels; the use of mobile phones blend this experience. For example, consumer’s price shop in-store, read reviews, or compare items. Mobile wallets play a key role enabling seamless checkout whether in-app or in-store.


Use Test Markets to get the Perfect Formula: Decide which components you are going to go-to-market with whether it is in-store promotions, in-app promotions, loyalty, rewards, etc. Consider driving more traffic to locations through push notifications via coupons or other forms of advertising. A great way to evaluate different methods is to pilot them in key markets with a limited number of stores. Measure key performance indicators such as user response, adoption rate, employee adaptability, and other ROI.


Employee Training: As with any new technology, it is impossible to ignore the time that needs to be dedicated to employee training. Because mobile wallets are an emerging technology, employees will need to be trained on how to support customers who want to pay with this method. Ease of use will be key in your mobile wallet success.


Mobile wallets are here and the market is certainly prime for acceleration. Over 70% of merchants indicate that they will roll out mobile wallets over the next 5 years. It is now up to merchants to capitalize on the opportunity. Make sure your payment provider is capable of supporting the latest in payment innovations, and whatever comes next.