Tapping Into a New Revenue Stream With Mobile Payments

According to an FIS Global Payments Report, eCommerce is expected to account for 12% of global consumer spend by 2025, with 59% of that spend transacted via mobile devices.

Mobile devices have become so ingrained in our daily lives as to become a primary means of communication between friends, family, and now businesses. Today’s consumers are overwhelmingly choosing to shop and interact with their favorite brands from the palm of their hand.

Findings from Square and Wakefield Research show that nearly all consumers (98%) want to connect with businesses via their mobile devices, and 30% expect to shop mobile more often. For businesses that have already responded to this consumer demand, a whopping 97% reported noticeable benefits, including increased sales from new customers (52%), increased sales from existing customers (47%), increased customer satisfaction (48%) and loyalty (44%).

As consumers continue to reach for their phones to browse and buy, and more businesses make an effort to reach them there, eCommerce brands will need to offer seamless, convenient mobile payment options at every turn to stand out. Here’s what you need to know to deliver.

What Are Mobile Payments?

Mobile payments refer to any transaction that happens on a mobile device, such as a smartphone, smartwatch, or tablet. These mobile payments can be made through a web browser when shopping on your smartphone, through a brand’s dedicated mobile app, or even by using a mobile device for contactless payment at the checkout counter via near-field communication (NFC) technology.

Mobile payments power mobile commerce, enabling consumers to complete purchases with ease, speed, and security, so that brands can drive more revenue than ever before. There’s no need to have a physical card or cash on hand at the point of sale — instead, consumers can turn to the device where they spend most of their time, leveraging mobile wallets, Tap to Pay, QR codes, and other easy-to-use solutions.

Paying Anywhere With Mobile Devices

Consumers who expect to shop anywhere expect to be able to pay with that same level of convenience. Fortunately, mobile wallets make it simple for shoppers to pay for products digitally, both online and in a brick-and-mortar store. This digital version of the wallet lives in your phone, allowing you to save bank, credit, or debit card information through secure, encrypted apps to more easily complete a purchase — and it’s extremely popular.

With Tap to Pay, businesses can accept all types of in-person, contactless payments right on their phones — no extra hardware needed. When customers are ready to pay, they can use a physical credit or debit card enabled for contactless payments or a digital wallet such as Apple Pay and tap directly on their iPhones to complete the transaction.

According to a recent study by Juniper Research, the total number of digital wallet users is on track to exceed 5.2 billion globally by 2026, or 60% of the global population, up from 3.4 billion in 2022. These digital wallets accounted for over $2.6 trillion (49%) of eCommerce transactional value globally in 2021, with digital wallet use predicted to rise to just over half (53%) of eCommerce transaction value worldwide by 2025.

It is critical that businesses adapt to these shifting behaviors, enabling shoppers to pay with their preferred mobile wallet (such as Cash App, Apple Pay, or Google Pay) whether online, in-app, or at your POS system to increase the chance of a sale and meet customers wherever they are.

Making Shopping Frictionless With QR Codes

Of the 77% of retailers Square surveyed that offer contactless payment options, 63% reported offering mobile wallet app payments and 25% offer quick response (QR) code payments. Much like mobile wallets, QR codes can also help bridge the gap between online and offline shopping and cater to the hybrid nature of mobile consumers who prefer to pay digitally wherever they are.

Through scan-to-pay technology, QR codes are an easily implemented solution for cashless and contactless payments. Businesses can display them online or in-store, printed on signs or on your POS screen. Sellers that use Square, for example, can accept Cash App Pay from customers, using a QR code at checkout to facilitate a quick and secure mobile transaction.

Consumers simply scan this unique code with their smartphone camera or barcode reader, which will prompt them to open a website or app where they can add their billing details or check out with their mobile wallet instantly.

Consumers Can Buy Now, Pay Later

What about consumers who prefer to pay for products or services over time? They can buy now, pay later (BNPL).

Led globally by Afterpay (acquired by Square), Klarna, and PayPal, BNPL is an online payment service that allows customers to pay for a percentage of their purchase, then pay off the remaining balance in interest-free installments over a set period of time. With Afterpay, for example, the customer pays for 25% of the purchase price and the rest in a four-payment installment window. The participating business receives the full value of the purchase from the payment service.

BNPL’s installment plans have been growing in popularity among eCommerce brands and consumers alike, with spending up 660% across generations and 925% for Gen Z since 2020. In 2021, BNPL accounted for approximately 3% of global eCommerce transaction value, and is projected to reach over 5% by 2025. In the same year, Credit Karma reported that 44% of consumers had used BNPL services to purchase an item, while a Zip survey showed 25% of merchants accepted BNPL payments.

BNPL offers even greater flexibility and convenience to consumers. For brands, this can translate to an increase in overall sales and average order value (baskets sizes are 17% higher in value according to an economic impact report by Afterpay), as well as wider consumer appeal, especially among mobile audiences, for improved acquisition and retention rates.

The Evolution of Mobile Payments

Mobile payments are dominating the eCommerce landscape, with mobile wallets in particular overtaking typical credit card usage all over the world. With further growth predicted across markets as consumers demand flexibility in how they pay, we expect to see greater business adoption to meet demand as well as advancements in mobile payment technologies. Meanwhile, other trends are emerging, such as the ability to “pay by bank” and seamlessly transfer funds from a customer’s account directly to the merchant.

No matter how mobile payments evolve, one thing is clear — brands need to prepare now, optimize existing checkout experiences for mobile devices and offer mobile payment methods that meet consumers’ expectations for shopping that is convenient, flexible, and secure. Those who do will be set up for success in the long run, as mobile commerce continues to expand its lead and payment preferences continue to shift towards digital.

About Square

Square helps sellers more easily run and grow their businesses with its integrated ecosystem of commerce solutions. Square offers purpose-built software to run complex restaurant, retail, and professional services operations, versatile eCommerce tools, embedded financial services and banking products, buy now, pay later functionality through Afterpay, staff management and payroll capabilities, and much more – all of which work together to save sellers time and effort. Millions of sellers across the globe trust Square to power their business and help them thrive in the economy. Square is part of Block, Inc. (NYSE: SQ), a global technology company with a focus on financial services. For more information, visit www.squareup.com.