Will Tools Like Apple Pay Move The Needle On Mobile Commerce?

“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Lauren Moores, vice president of analytics at Dstillery.

With holiday shopping following close on the heels of the fall release of the iPhone 6 with Apple Pay, I expect shopping behavior to shift further toward mobile because of reduced transaction costs.

Already mobile commerce (mcommerce) is expected to account for 19% of US ecommerce retail sales this year, according to eMarketer, totaling $57.79 billion overall. Now we’re all waiting to see whether integration of Apple Pay and other mobile payment options in brand mobile apps or mobile-optimized sites will create momentum, giving retailers that final piece of data that shows the value of mobile in the consumer path-to-purchase journey.

Using the mobile phone to pay for purchases is not new. Is this fingerprint-based NFC iOS-only solution just a shiny alternative to solutions already in play, such as M-Pesa (SMS-based payment), PayPal, Google Wallet or Softcard? How does it fit with existing consumer bank options, One Coin or Plastc? Did it just make the competing MCX CurrentC QR code approach obsolete before it is released?

Apple Pay, similar to the iPhone-driven accelerated boost to the US smartphone market, will likely stimulate the mobile payment market overall, leading to more merchants and brands allowing users to pay via mobile. And that should lead to a better path-to-purchase experience for consumers and less abandoned mobile shopping carts for retailers. How often have you clicked on a mobile link to purchase an item and then abandoned the effort after being overwhelmed by the complexity of the process?

The advertisement may have reached the right consumer, but I have broken my own purchase funnel many times for a variety of reasons, such as PayPal’s authentication issues, not having my credit card with me, not wanting to pull the card out in a crowded space or even due to broken redirects that left me hanging.

Those brands that provide an easier way to purchase their products via mobile will likely win. For now, the mobile payments market share and the audience using these solutions is still up for grabs. About 20% of smart device owners used a mobile wallet in the previous 90 days, according to Javelin Strategy & Research’s Mobile Wallets Analysis released in October. The percentage of consumers using their mobile phones to buy physical goods has increased from 14% in 2009 to 51% in 2014.

So, if more merchants supported mobile payments, would more users choose to buy goods? Fewer than 5% of those with the ability to use Apple Pay during Black Friday actually did, according to a survey from InfoScout. But for those who did, the majority loved it.

As for the ability to provide more data signal to brands on the path-to-purchase journey, if there are more mobile ecommerce transactions, we have more directly connected data for measurement. On the other hand, the current in-store “tap and pay” approach actually breaks the data-tracking path. In general, the more solutions a merchant or brand supports, the more fragmented the data access becomes.

In addition to Google Wallet, I have also tried Apply Pay and liked it. It is not top-of-mind for me yet, and more merchants and brands would need to embrace it before my shopping behavior changes. I expect 2015 to provide much more evidence for how mobile payments affect consumer behavior. I also predict that we will see even more mobile purchases and advertising due to the growth of the Internet of Things and the integration of payments in these devices.