Mobile Pay App Growth Fueled by Unbanked
By Grace Austin
The battle for mobile pay app supremacy is heating up, as one platform experiences major growth from lower-income consumers.
Brand name financial apps from market leaders are, according to Quartz, capitalizing on different markets.
Overall, mobile payment apps have grown exponentially — the transaction volume will measure into the trillions by 2022 — and globally there are more than a dozen payment apps available. Consumers likely are drawn to the ease and straightforward nature of using mobile apps for buying things, “allow[ing] customers to make online and point-of-sale purchases, pay bills, and send or receive money from their smartphones,” according to a Pew Charitable Trusts report. More and more vendors are increasingly accepting mobile payment as well.
The mobile payment app industry is also disrupting part of the alternative financial service market. Quartz analysis shows that mobile payment apps are actually taking business from prepaid cards. This could be good for lower-income consumers, who are either charged high fees for using prepaid cards, or could be looking to payday or title loans for financial help.
But just because the mobile pay apps’ primary users are low-income consumers and millennials doesn’t mean the companies aren’t looking beyond those users. Analysts see mobile pay apps potentially capturing the millions of unbanked who don’t own a checking account or credit card. Eventually, mobile pay apps could start competing against traditional banks, and even expand into a greater financial “ecosystem” encapsulating consumers and vendors, as Quartz put it.
Mobile payment apps are not without their criticism, particularly from consumer advocates. For one, several of the top apps received fair scores on data privacy and security from Consumer Reports. This could potentially leave users open to hackers or fraud.
“While all the services we evaluated are safe to use, we would like to see the providers do better and take additional steps to make sure every way to pay is safe,” Christina Tetreault, a Consumer Reports financial services expert, told NBC News in 2017.
As Pew reported, “Consumers want the data they generate by use of mobile payments to be secure and protected and access to it to be limited across entities, from phone carriers to app developers and advertisers.”