While there have been great advancements in the mobile payments space, several factors are inhibiting stronger growth and adoption.
First, some consumers—particularly older demographics—find mobile payment apps difficult to use. “There are definitely significant pain points when it comes to setting up and using a mobile wallet,” Orozco said. “Some adopters given the apps a try, and then fail to return for future in-store purchases.”
Then there’s also the issue of some businesses, especially small businesses, not being set up to accept mobile payments. Even big-box retailers that currently accept mobile wallets only accept a few of the choices out there. According to Orozco, this lack of cohesiveness has stymied growth.
Still, the volume of transactions happening via mobile wallets is increasing. In 2020, more than $182 billion transacted in-store via mobile wallets in the US, up $30 billion from our previous estimate.
This year, that transaction value will jump to nearly $250 billion, and by the end of 2025, it will exceed $500 billion.
“Though they still account for only a small percentage of all brick-and-mortar spending, proximity mobile payments will continue to pace the market as their usage increases,” Orozco said. “In the near term, we expect these apps to focus on incentivizing adoption by offering rewards and discounts at partner retailers. They will also tie in new features like peer-to-peer payments and cryptocurrency purchasing, which should also hasten engagement.”