Consumers are carrying less cash today than ever. According to a recent Bankrate survey conducted by Princeton Survey Research Associates International, 40% of respondents reported that they carry less than $20 in cash in their wallets. Only 9% of those surveyed in 2014 by TSYS said they preferred cash over cards as a payment method. And a recent MasterCard survey reported on Consumercredit.com revealed that 80% of U.S. consumer spending is cashless.

While these data points illustrate how consumers utilize cash today, they also beg the question: How long before payment cards follow suit, especially given new advancements in digital wallet technology?

Globally, the mobile payment market reached $450 billion in 2015 and is projected to rise to $1 trillion by 2019, according to research published by Statista.com. Even so, this doesn't mean that either cash or cards will disappear from the point of sale any time soon.

Consumers carry cash, even if in small amounts, because it works every time, requires no authorization and never runs out of battery life. Card usage has a proven history with consumers as well and is rising – up 7.8% annually nationwide, according to Credit-Land.com.

While cash and cards are likely here to stay, so are digital wallets – partly because they allow consumers to leverage one of their all-time favorite toys, the smartphone.

Today's Mobile Consumer

The Huffington Post reported that 71% of consumers sleep next to their smartphones, 35% check the phone as soon as they wake up and 29% continue to check it every five to 10 minutes throughout the day.

What exactly are we, as consumers, doing on our phones all day? Using apps, a recent Nielsen report said, identifying gaming, entertainment and social media apps as our top picks. So what will it take for Apple Pay and other digital wallets to gain traction with consumers?

Testing the Waters

To a certain extent, they already are – mobile payments are, in fact, on the rise. However, the majority of mobile transactions completed at checkout today are for low-priced items, such as a morning latte, suggesting that consumers are still “testing the waters.” When it comes to higher-ticket items, such as appliances, cards remain the payment method of choice.

Demographically, tech-savvy millennials have been faster to embrace digital wallets than older consumers. But the biggest obstacle preventing their widespread adoption has been lagging support from merchants. That dynamic is changing.

Early Adopters Lead the Way

A 2015 study issued by Berg Insight and published on Digitaltransactions.net reported that 9 million NFC-capable terminals are now enabled at U.S. merchant sites, up threefold from 2013. And early adopters of the technology are enjoying success.

According to mobilestrategies360.com, mobile payments accounted for 21% of sales across Starbucks stores during the fourth quarter of 2015, totaling $1.03 billion for the quarter. USA Today reported that Walmart's own mobile payment app, Walmart Pay, has 22 million active users, and that in-store usage of the app has nearly doubled year over year.

Tech giants Google and Amazon continue to invest heavily in the technology as well, with solutions that take the digital wallet one step further. Techcrunch.com reports that Google's Hands Free mobile payment app allows a mobile device to communicate with an NFC terminal without being swiped, clicked or even removed from a purse or pocket, for Android Pay transactions that are effortless, highly secure and instantaneous.

Amazon's new Dash Button reflects how future mobile technologies might work for consumers. Available from select Amazon merchants and only to Prime customers, Dash Buttons can be placed throughout consumers' homes next to items they will likely replenish, such as detergent, razors or diapers. And at the moment consumers notice their supplies running low, they can simply press the Dash Button to reorder via their Wi-Fi network. Their Prime account is then charged, and the product will arrive – with free shipping – in just two days.

According to The Atlantic, the Dash Button and other technologies like it are fueling a trend known as ether-commerce, whereby mobile technology is embedded in what the article calls “the secret recesses of ordinary life,” allowing consumers to bypass the phone and computer altogether.

How to Move at the Speed of Mobile

Given how quickly mobile payments are evolving and the increasing consumer interest in them, it is vitally important for credit unions to have a sound mobile strategy in place – and to execute well on it with a reliable service and support organization.

Best practices suggest that it is better to be selective about the technologies you deploy than to leave members without the support safety net they will require. Offering even just one or two of the major digital wallet platforms will get you into the market and give your members all the speed and convenience they expect from mobile.

And as with any technological undertaking, remember to keep your mobile strategy focused on the member experience – not on transactions. The mobile platforms you offer should be intuitive, engaging and consistent every time.

CO-OP Financial Services is a financial technology company that supports its network of 3,500 credit unions and their 60 million members by providing a cutting-edge suite of customizable tools and services. The company was the first in its industry to merge purpose, innovation and technology to help credit unions advance the industry mission of “people helping people.”

Instant Insights /

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