How mobile wallet apps are changing consumer habits

Editor’s note: Nielsen Newswire is the digital news channel of Nielsen, a global provider of consumer information and insights. The following piece was originally published here under the title, “Paying it forward: How mobile wallet apps are changing consumer habits.”

In an age of tap and go, mobile payments are providing increasing convenience for consumers as well as potential opportunities for marketers.

Randall Beard, Nielsen’s President of Expanded Verticals, moderated a panel this week at Nielsen’s Consumer 360 Conference in Washington, D.C., to discuss the current mobile payment landscape and the opportunities it will provide to marketers. Louise Keely, President, The Demand Institute/SVP Nielsen, Ben Jankowski, Group Head, Global Media, MasterCard, and Alberto Jimenez, Retail & Mobile Payments Leader, IBM, took the stage to share their thoughts about the future of mobile wallet payments and the landscape of current mobile wallet app users.

During the panel, the group spent a good deal of time discussing the challenges around adoption in developed markets, largely because of the abundance of players and technologies in play.

“There’s no question it’s going to come,” said MasterCard’s Jankowski. “One of the barriers to scale is figuring out what the standards are. I think that’s a fundamental issue we need to overcome. But there’s no doubt adoption will come.”

Comparatively, however, the group acknowledged that mobile wallet adoption in emerging markets is already setting the global pace. One of the big reasons for that, said the Demand Institute’s Keely, is because cash is expensive.

“If you don’t know what’s happening in emerging markets, go learn about it,” she said. “Because that’s what’s going to migrate to developed markets.”

When it comes to opportunity in the space, IBM’s Jimenez cited notable growth in merchant-based apps – even though many consumers find themselves using just a small number of apps on a regular basis.

“I would pay a lot of attention to merchant-specific wallets,” he said. “I know there are lots of apps on people’s phones. But the numbers are showing that the growth is at the merchant-specific applications.”

On average, U.S. smartphone users accessed 26.7 apps per month in the fourth quarter of 2014. For 18 percent of these U.S. smartphone users, at least one of the apps they accessed during the average month in Q1 2015 was a mobile wallet app. Additionally, the financial habits of mobile wallet app users skew toward the more affluent, offering excellent potential opportunities for marketers, as consumers who utilize mobile payments generally over-index on almost any banking product, and have investment accounts. They also use college funds at nearly five times the rate as the total population!

According to MasterCard’s Jankowski, a big key in unlocking the potential of mobile wallets lies within the data.

“The more we can get data about purchasing at a one-to-one basis, the better we’re going to be,” he said. “The closer we get to the information, the more effective marketers will be able to be.”

“Cash is expensive and it’s not safe,” added IBM’s Jimenez. “From merchant perspective, it’s about learning about your customer. Mobile wallets can close the loop.”

The future of mobile payments is poised for growth. According to a recent Harris Poll, roughly six in 10 Americans anticipate that tap-to-pay smartphones will eventually replace payment cards (63 percent) and cash (57 percent) transactions,  at some point, though not necessarily in the near future.  In fact, three in 10 Americans believe these transactions will replace credit/debit cards in the next five years, and roughly one-quarter of Americans believe they will replace cash within that timeframe.

“Someday shopping is going to feel like entertainment,” said Keely. “Money is going to be at the center of it all. It’s going to be fun.”

Insights came from Nielsen’s Mobile NetView 3.0, Nielsen’s Financial Track Survey, and an online, English-language Harris Poll of 2,221 U.S. adults fielded February 11-17, 2015. Mobile Wallet users were identified using Mobile NetView 3.0, Nielsen’s on-device software, which is installed with permission on panelist smartphones (approximately 5,000 panelists ages 18+ with Android and iOS handsets). The panelists are recruited online in English and include Hispanic, African-American and Asian-American consumer representation. Mobile Wallet users were linked to the Nielsen Financial Track survey using Nielsen’s PRIZM segmentation system, to allow profiling of financial habits. Nielsen Financial Track is a quarterly online survey of 12,500 respondents, conducted in English and in Spanish and includes an over-sample of 500 Spanish-dominant Hispanics.