While traditional point of sale payment methods continue to reign supreme, a number of third-party mobile wallets are jockeying for position in the U.S. marketplace -- but not all have the vision needed for long-term survival.
To endure the inevitable wave of consolidation, a well-defined road-map paired with patience and endurance will be among the many competencies required.
According to the latest market study by the Yankee Group, they ranked the staying power of Google Wallet, Isis, LevelUp, Loop, MCX, PayPal, and Square as determined by the strength of their merchant and consumer value propositions and ability to deliver on them.
Highlights from the market study include:
- Mobile wallets remain a story of high interest and low adoption, as just 16 percent of mobile device owners have used their phone to make an in-store payment in the past three months.
- PayPal has taken an early lead in the mobile wallet race. With 15 percent of consumers having used its application in the past month to make an in-store transaction, PayPal enjoys nearly four times the adoption of its closest third-party wallet competitor, Google.
- Prioritizing integration with SMB point of sale (PoS) systems can lead to near-term adoption. Smaller merchants see greater value in third-party wallet solutions as compared to their upmarket counterparts.
"With the hype surrounding mobile wallets building on a daily basis, separating the signal from the noise has become increasingly difficult. The harsh reality is that despite billions in investment across the ecosystem, adoption of such mobile payment technologies has been far from illustrious," said Jordan McKee, analyst at Yankee Group.
Just 16 percent of mobile phone owners have used it to make an in-store payment in the past three months. More concerning, of those using mobile wallets, 73 percent are doing so fewer than five times per month.
Clearly, the way Americans pay for goods and services is not likely to change anytime soon. Although cash and debit/credit cards may enjoy dominance for some time, with two-thirds of surveyed consumers interested, Yankee believes it's important to recognize that the mobile wallet is a latent opportunity.