Changing Ways to Pay in 2022 – Smartphone Payments on the Rise

Smartphones Becoming More Popular in Payment

In Germany, nine in ten people have a smartphone.¹ And everyone who has a smartphone uses it for much more than just calls and messages. According to the ECC Payment Study Volume 26, a third of smartphone owners search for products, services, information, and inspiration online only on their mobile device. The study reveals that 85 percent of smartphone owners regularly shop on their smartphone.

The result is that an increasing number of consumers are using their smartphones like wallets. Around a third of consumers at least occasionally use their smartphone to pay – and the number is increasing. 59 percent of survey participants responded that they want to make more payments with their mobile device in the future. So, the question for retailers is: How do customers want to pay with their smartphone? Which payments methods should be available for mobile devices?  

¹Source: Statista – Proportion of smartphone users in Germany by age group in 2021

BNPL Is a Growing Trend on Smartphones

The ECC Payment Study shows that buy now, pay later (BNPL) payment methods are quickly gaining traction in smartphone shopping. For three quarters of smartphone owners, paying by invoice is one of their top five favourite payment methods. Nine in ten surveyed consumers have already used their smartphone to purchase a product on invoice. Paying in instalments is also becoming more popular: 30 percent of survey participants have already used this payment method on their smartphone. BNPL payment methods are second only to PayPal. Every single survey participant knows PayPal, and 85 percent prefer to use it when shopping. This makes it the most popular smartphone payment method. 75 percent of survey participants prefer to pay by invoice. The third most popular smartphone payment method is credit card with 45 percent. 

For retailers, the rising relevance of invoice and instalment payments means that they should add BNPL options to their mobile checkout. In this way, they can meet customer expectations by offering their favourite payment methods. But in addition to BNPL, digital wallets and smart payment methods are also important for smartphone payments at the POS.

Digital Wallets: Well-Known and Often Used

Digital Wallets: Well-Known and Often Used

Almost every smartphone owner knows at least one digital wallet solution. PayPal tops the list of best-known digital wallets. In the ECC study, every participant claimed to know the solution. Alternatives like Google Pay and Amazon Pay are known by 85 percent of consumers. Apple Pay is another popular digital wallet solution, known by 81 percent of respondents. Amongst customers who use their smartphone to pay for products, PayPal is the popular digital wallet. 90 percent of consumers have used PayPal to pay using their smartphone at least once. Amazon Pay (38%) and Google Pay (17%) come in second and third respectively. Apple Pay is used less frequently (12%). 

What do these results mean for merchants? Firstly, digital wallets should be offered alongside BNPL options in the mobile checkout. A selection of wallet solutions combined with the option to pay by invoice can increase the conversion rate. The ECC study reveals that a quarter of consumers abandon their purchase if none of the top three three payment methods is available. And the top three payment methods on smartphones are PayPal (85%), pay by invoice (75%), and credit card (45%). Customers want the freedom to choose their preferred way of paying. By offering these three payment methods for smartphone shopping, retailers can give customers this possibility. That has a positive effect on revenue. And the same applies to the POS.

Digitalisation at the POS: Smartphones and BNPL Gaining Traction

The point of sale is becoming more and more digital. The result: Customer payment preferences are noticeably shifting towards contactless payment. Around two thirds of respondents regularly make contactless payments. Smartphones are being used more than ever before to pay at the POS – and it is an upwards trend. More than half the surveyed consumers responded that they intend to make more contactless payments in stores using their smartphone in the future. For retailers, this offers a good opportunity to make use of unified commerce strategies and offer BNPL options at the POS.

As important as variety is, merchants should also consider that too many payment options can make the checkout confusing. It is much better to carefully select payment methods according to the main target customers. A mobile-optimised checkout is crucial, as 28 percent of smartphone owners abandon their purchase otherwise. Many merchants have already understood the importance of a mobile-optimised checkout, with 71 percent already offering this feature. In January 2021, this figure was only at 41 percent.

Summary: Smartphone Payments Are Becoming the Norm

The ECC study confirms that smartphones are becoming ever more important in payment. They have not yet completely replaced the wallet, but they are quickly catching up. In the future, paying with a smartphone will be more and more commonplace. To continue to be successful, merchants should follow this development. New, digital payment concepts are needed both online and at the POS to keep customers happy in the long term.  

Über die ECC Studie:

The ECC Payment Study Vol. 26 examines the use of smartphones as a shopping and payment tool. It providers merchants with a comprehensive source of information about current developments in payments amongst various target groups. The study’s findings help merchants make strategic decisions about their own payment offerings.

The study is based on a January 2022 survey of 2,000 consumers in Germany. Also in January 2022, 241 German merchants (online, multichannel, and retail) were surveyed. It is the only study on the market that reveals payment insights from both the consumer side and the merchant side.

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