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Understanding Consumer Preferences Around Payment Apps

January 31, 2023

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Decoding Consumer Trends in Payment App Adoption

With the need for smooth, hassle-free payments on the rise, we look at how payment apps are growing in popularity and how to navigate the competitive market.

There has been a patent increase in the use of payment apps for in-store and E-commerce transactions. Around nine out of ten Americans actively use some form of digital payment method for daily transactions. This shift toward digital payments and apps can be compared to the credit card revolution of a few years ago. With a high degree of security and ease of use, digital payments have become a trusted and secure option for consumers.

The global payment app market is estimated to grow at a CAGR of 34.3% by 2030, making it an attractive option for many FinTech, retail, and banking businesses. However, even with several options, most consumers are still unsatisfied, while the remaining could be pickier. Before venturing into the realm of developing a one-stop-shop payment app to satiate all consumer needs, it is crucial to analyze consumer preferences and behavior.

Navigating Through Competition

The idea of human life having optimal technological integration has become an unsolvable cluster due to the phrase, “there is an app for that.” The economy is flooded with options. Consumers have over 3.55 million app options on the Google Play store while 1.6 million options on the Apple App Store. As a result, consumers are becoming increasingly picky, and businesses are struggling to keep up with their expectations in the current scenario.

More than 50% of consumers agree to be the most digital they have ever been, with around 39% switching to online shopping over smartphones, while 23% of shoppers make at least one online purchase daily. What was expected to be the solution to the pandemic is becoming a daily routine in a post-COVID world. However, the majority still want more payment app features and expect their needs to be met entirely.

The entry of “super apps” have brought about a significant change. Super Apps provide a wide range of services on one platform, eliminating the need for consumers to install multiple apps for different uses. It is speculated that Instagram and Facebook could soon become super apps, combing shopping and payments with social media experience. Experts predict that over half the population will be using multiple super apps by 2027, an excellent opportunity to tap into a new customer base for FinTech.

Mobile Wallets Are Taking the Lead

Though mobile payment adoption is emasculated in developed nations, most people in the US have embraced this cushier alternative to credit cards. When it comes to determining their choice of retailers, digital wallet options have also gained popularity, with 9.3% of consumers citing it as a determining factor in their choice of retailers. This is in comparison to 5.4% who cite personalized experience as a factor.

There has been a consistent increase in merchant-based wallets (third-party FinTech wallets) over Apple Pay or Google Pay. While Apple Pay accounts for nearly half of all in-store digital wallet purchases, Google Pay accounts for another 10.3%. The high adoption rate of leading payment apps by retailers will undoubtedly create a domino effect by eventually attracting customers toward the smarter solution.

Focus Where the Future Lies

The primary consumer base of payment apps comprises Gen Z and Millenials, the generations with the highest technology exposure. The two generations combined constitute a large chunk of America’s spending power, with Gen Z accounting for an estimated $360 Billion in disposable income. Payment apps are particularly attractive to these groups as they are convenient and quick, eliminating the need to carry cash or cards while shopping online.

Gen Z has various doubts about their payment methods, even distrustful of the traditional ones. Millennials are even likely to avoid shopping at stores that do not have contactless payment methods, while Gen Z prefers BNPL payment methods over paying upfront. They are also very actively engaged in live commerce.

The Way Ahead

In conclusion, a majority of consumers are still looking for more features in payment apps, and their needs are not wholly met. Businesses must focus on meeting the needs of consumers, particularly Gen Z and Millennials, by analyzing consumer preferences and behavior before developing a payment app. As such, the best payment solution for them should incorporate features to meet their needs while securing the entire shopping experience, payments, and other digital transfers.

If you need assistance to navigate the ever-changing digital payment landscape and incorporate digital wallet options into your business strategy, do reach out to us by scheduling a consultation call with one of our experts.

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