Black Friday is here, with retailers and bargain hunters alike gearing up for the biggest shopping event in the calendar. But the big question is how will consumers pay for their discounted goods this year?
When Apple Pay was first launched in the UK in July 2015, mobile payments were hailed as the next big innovation set to transform the retail sector. However, a year on and adoption rates have been much slower than expected. According to recent research, only 17 per cent of UK consumers have used Apple Pay – and only 2 per cent use the service on a regular basis. In fact, last Black Friday, Apple Pay usage was at its lowest ever rate, accounting for only 2.7 per cent of eligible transactions.
But it’s not time to write mobile wallets off just yet. The use of mobile payments is actually on the rise and experts believe that adoption rates are set to soar – particularly with new players entering the market, such as Android Pay, which was launched in May this year, and Samsung Pay, which is expected to be launched later this year. According to eMarketer, mobile payments are expected to be worth $27 billion by the end of the year. And by 2018, Gartner predicts that more than half of consumers will be making payments via their smartphones or wearable devices.
So, with Black Friday upon us and shoppers expected to splurge around £5 billion, could we see a surge in mobile payments this year, compared to 2015?
What will encourage consumers to use mobile wallets this Black Friday?
Making payments on a smartphone or wearable device is an extremely quick and simple method of completing transactions. Users of Apple Pay and Android Pay can simply hold their devices up to the payment terminal, tap a button or enter a pin, and the purchase is complete. It’s as simple as that. There’s no need to carry cash or a wallet full of cards, just the phone that most people carry around in their pockets every day.
For Black Friday, this means purchases can be made quicker, potentially reducing those extremely long queues and making for a more streamlined shopping experience. Not only this, but using mobile payments is a much more secure way of purchasing items, compared to using a credit card. That’s because the payment information entered on to the smartphone is encrypted and isn’t stored on the phone, so even if the device is lost or stolen, the data can’t be accessed.
Also, this information isn’t shared with any retailers when transactions are made, so again the user’s details are securely protected. During extremely busy periods like Black Friday, leaving credit cards at home and paying with a smartphone is a wise choice, as it prevents private information from being stolen and used to commit fraud or cybercrime.
What are the potential barriers to this payment method?
Currently there are a number of downsides holding mobile wallets back from being the preferred method of payment. These issues have largely contributed to the slow adoption rates we’ve seen so far, since Apple Pay was launched.
One of the main problems that may affect how many people use their smartphones this Black Friday is the payment limit, which restricts users to purchases below £30. A large majority of items bought on Black Friday are likely to be over this limit, with shoppers hunting out the best deals on the latest gadgets and luxury items. So, mobile wallets might not be the most appropriate method of payment on 25 November, possibly resulting in similar low usage figures seen in 2015.
As Apple Pay only works with the iPhone 6, 6S, SE and ‘Plus’ models, mobile wallets are also not an option for shoppers with older handsets. The same goes for Android Pay, which is only available on the latest Android phones. Those who have not yet upgraded to the newest handsets will be unable to use the mobile payment function, which will significantly restrict the number of people eligible to pay with their smartphones on Black Friday.
It’s also important to bear in mind that payment habits also need to change in order for more people to start making purchases with their smartphone. When contactless cards were first introduced in 2008, it was a case of encouraging people to change their paying behaviours. Only now are we really seeing a significant growth in the number of people opting to use the contactless function, rather than choosing to enter their chip and pin. As such, people need tobe given time to come around to mobile payments – consumers are used to paying with their credit cards, so change is not going to happen overnight.
It’s clear that mobile wallets still have some way to go before we see them truly disrupting the world of contactless payments. But all of this could change over the next few years. It will be interesting to see the user statistics from Black Friday to determine whether mobile payments are likely to take off in the near future as predicted.
We think that mobile payments do have the potential to innovate our purchasing methods, but only time will tell for certain.
Nick Black, CEO of Apadmi
Image source: Shutterstock/Denys Prykhodov