Exploring The B2C Mobile-First Trend

Consumers around the world are making the shift: making more of their online purchases on their mobile phones rather than computers. They’re also making payments in different ways, using mobile devices to make proximity purchases in physical stores, for instance, or connecting to merchants’ websites or apps to transact. But they’re not necessarily “mobile-first”—yet. It’s only a matter of time before digital payment methods overtake paper ones, and retailers are getting ready by taking a mobile-first mindset, offering enhanced mobile capabilities to their customers.

The Battle Between Payment Methods

Cash may still be “king” as far as payment preferences go, but digital alternatives are growing faster. A recent Euromonitor International study found that consumer card payments and mobile-commerce will see a respective 6.6% and 23% compound annual growth rate (CAGR), from 2016-2021, whereas global cash payments will register a CAGR of just 1.3%.

Why? Because consumers always seem to have their connected devices in-hand, and they’re using them for a variety of purposes. Euromonitor International’s 2016 Global Consumer Trends Survey reveals two key m-commerce drivers:

• More mobile phone users: From 2011 to 2016, global smartphone ownership rates rose from 20% of households to a projected 58%
• Increased reliance on mobile phones: 58% of consumers turned to their phones for at least five separate activities each day in 2016, compared with 34% in 2015

These factors are also driving growth of the consumer “mobile-first” mindset.

MobilePaymentsToday.com cites recent Euromonitor findings that Chinese consumers—representing a whopping 58% percent of mobile commerce in 46 separate markets studied—have already made the shift to making more payments via mobile devices than on computers. And by 2020, they estimate that consumers in the U.S. and U.K. will join them.

Global Uptake of Mobile Payments

Taking a global view of mobile payment preferences, let’s turn to insights from two recent studies aimed at understanding consumers’ attitudes and behaviors around digital technology.

The Mastercard Impact of Innovation study surveyed 23,000 consumers in 23 different countries across Europe, Africa and the Middle East. When asked about new ways to pay, consumers across all regions chose their smartphone as an alternative to the plastic card. Over 70% of consumers in Africa and the Middle East said they were ready to pay with their smartphones, while only 38% of Western Europeans said so.

On the other hand, Visa’s 2016 Digital Payments Study factored in the responses of more than 36,000 people in 19 European countries. It found that 54% of European consumers are using a mobile device to make payments for a range of activities in-store, in-app and online—compared to 18% at this time last year. As for per-country proportions of mobile payment adopters:

• 91% Turkey
• 89% Denmark
• 87% Norway
• 87% Israel
• 86% Sweden
• 79% Poland
• 79% Romania
• 78% Ireland
• 77% Finland
• 75% Belgium
• 74% UK

As for the US, the Federal Reserve’s 2016 study of Consumers and Mobile Financial Services found that just 28% of smartphone users made a mobile payment in the 12 months prior to the survey. The three most common mobile payment activities among mobile payments users with smartphones were

• Paying bills through a mobile phone web browser or app – 65%
• Purchasing a physical item or digital content remotely using a mobile phone – 42%
• Paying for something in a store using a mobile phone 33%

The Other Side of Mobile: Mobile POS explores the in-store use of mobile devices.

Retailers Choose “Mobile-First”

While consumers may not be making all (or even some) of their purchases on their mobile device, their first impression of a product or service may very well happen in the mobile channel. This means it’s critical for retailers to deliver a winning mobile experience to customers, one that supports the path to purchase, even if said purchase occurs in-store or on a PC.

For more insights, read National Retail Federation’s coverage of the 15^th annual Retail’s Digital Summit.

In fact, in discussing their 2016 Global Consumer Trends Survey results, Euromonitor International says that “Mobile-optimized websites and apps are now the rule, rather than the exception, and brands that do not provide easy mobile access to information and products risk alienating shoppers, losing their loyalty and discretionary income for years to come.”

Security First?

And for consumers to become mobile-first, it’s clear they need peace of mind. The Mastercard study found that consumers, across all of the regions surveyed, want digital payments security, agreeing that bank account security is their number one priority, followed by the security of their personal data. While consumers across all regions say they value the speed and simplicity of the payment process, they need to have enough trust in the transaction to make it their first choice, time and time again.

This sentiment is well understood among merchants. In an article on Recode.net, Ben Bajarin of market research firm Creative Strategies claims, “It’s not consumers standing in the way of adoption of contactless, tap-to-pay technology. Retailers and banks need to make the appropriate moves to bring this safer and more secure way to pay to their customers.”

For more on the topic of mobile payments and security, read Mobile Payment Fraud Rises as Mobile Payments Grow and Growth in e-Commerce Fuels Development of Mobile Security Solutions.

The B2B Connection

As mobile payment technology continues to mature and security solutions come to the rescue of any outstanding consumer security concerns, it seems conceivable that the majority of consumers will pick up their smartphone—most of the time—when it’s time to make a purchase. With that behavior taking shape, it’s likely that as B2B payers, they’ll expect their B2B payments to be made as effortlessly—at least some of the time. How quickly the corporate payments marketplace will follow suit remains to be revealed.

Read B2C Payment Tech Trends Energize The B2B Market for more. And for a glimpse into what mobile payments technology brings to the B2B payer, see 3 Ways Mobile Technology Enhances the B2B Payments Experience.