Technology is driving consumers to make purchases using many different types of point of sale (POS) experiences. Credit and debit cards need to work across all of these experiences, in a growing list of locations. Issuers can meet this need by using channel-agnostic payment credentials that work in a fast, safe and convenient way across any channels the customer chooses to use.
The evolving payments industry
Dramatic shift to mobile payment
The payments landscape is rapidly evolving due to a rise in digital commerce and an increase in mobile device usage. Smartphone penetration has increased to 74 percent in the U.S., and mobile payments adoption is expected to continue to expand in the future.¹
Digital commerce growth²
Mobile devices garnered twice the purchases of desktop purchases in total retail traffic over the 2015 holiday season⁴
Mobile saw a 60 percent year-over-year (YoY) growth rate during the holiday season, with slowdown at physical stores or locations⁴
Projected retail mobile commerce sales growth from 2016-20206
As more alternate payment methods continue to emerge, the “top of wallet” notion has been replaced by “top payment method.” Among Apple Pay users,⁵ only 23 percent regularly change their default card, emphasizing the importance of an issuer establishing their card as a primary payment method.
Top of wallet should be top of mind for consumers
Top of Wallet (column 1), Top of Merchant (column 2), Top of Phone (column 3), Top of Device (column 4)
Top of Wallet
Top of Merchant
Top of Phone
Top of Device
Apple Pay, Google Wallet, Samsung Pay
Issuer Pay Apps
Cards on file
Internet of Things
Source: eMarketer estimates 2014-2015. U.S. market Juniper NFC North American Mobile Payments forecast 2014–2015; BI Intelligence Estimate, February 2015.
Changing consumer behavior
Consumers use multiple devices, and they want an intuitive and seamless user experience across all applications. Issuers need to focus on a mobile-first, user-centric design strategy in order to drive consumer preference for their payment products.
Payment credentials must work in a fast, safe and convenient way across any channel the customer uses. Convenience and checkout speed drive the convergence of payment channels. A digital payments strategy must take an integrated approach to the various POS channels available to consumers.
Millennials are increasing demand
As we demonstrated in Marketing Credit and Debit to Millennials, this segment has increased the demand for alternative payment methods. Compared to Baby Boomers, millennials are more likely to use mobile payments, and they prefer different channels of engagement (such as text versus talk).
Consumer payment option usage: Millennials vs. Baby Boomers
Use smartphone as a mobile device payment (any type of purchase transaction using a smartphone)
Use their phone to make a payment
Are extremely willing to be tracked by trusted merchants
Extremely interested in using wearables as a payment device
Expect to use PayPal at least weekly by 2020
Use wearables as a payment device daily or weekly
Expect to use digital currencies daily or weekly by 2020
Use digital currencies today daily or weekly
Use a smartphone
Source: The Futures Company, 2015 Monitor.
Four ways to drive adoption
Address security threats: Sixty-two percent of non-mobile wallet users cite “security” as the main barrier to making payments on their mobile devices.³ Issuers must stress that cardholder data and personal information remains secure during the entire mobile payment experience. Make security efforts transparent to cardholders through effective messaging.
Make it convenient: Alternate payment methods that offer a frictionless online and mobile shopping experience provide a simpler and faster process at checkout than a traditional method of payment. In order to increase cardholder adoption and use of nontraditional payments methods, promote the ease of use and convenience benefits offered by digital payments.
Increase utility: Expand offerings outside of just a convenient payment experience by providing more value to cardholders. For example, partner with merchants to enhance wallet functionality to include storing loyalty cards or allow customers to pay with reward points. According to McKinsey’s Mobile Payments Consumer Panel, 55 percent of respondents said that being able to use reward points at checkout is essential or very important.⁷ Some countries are even allowing government IDs to be stored in digital wallets as an added feature.
Create offers and incentives: Offers and incentives encourage customers to register their card directly with merchants (e.g. Amazon and Uber) as well as mobile wallet providers (like Apple Pay). Co-brand cards have the advantage of using increased earning opportunities for cardholders by rewarding spend at certain merchants, which encourages consumers to choose that card over others.
How Visa can help
As a digital leader in the digital payments space, Visa is committed to developing new, innovative payments methods that meet the needs of consumers. Visa’s strategy to build new payments capabilities and encourage nimble product development will continue to shape the future of commerce.
Visa Consulting & Analytics can:
Benchmark your current digital capabilities to industry competitors
Present you with industry landscape analyses, best practices and payment practice opportunities based customer attitudes, needs and wants
Optimize your strategy for your customer base
Design an optimal experience based on your customer segments
Help you design and implement a new digital strategy