More U.S. consumers have been using mobile wallets at the point of sale since 2019, driven initially by the COVID-19 pandemic and subsequently because of the additional utility and security built into the payment method.
Mobile wallet spending rose from 0.6% of all U.S. card spending in 2019 to 5.9% in 2023 and 7.2% in the first two months of 2024, according to Milwaukee, Wisconsin-based payments technology firm Fiserv's SpendTrend report. Fiserv's mobile wallet data comprises in-person, in-app, and online mobile wallet payments.
Alongside the growth in mobile wallet use, there has been a drop in the average value of transactions, suggesting a greater number of small-value payments in the mix.
The overall average ticket size for mobile wallets fell from a peak of $39.58 in 2021 to $33.51 in the first two months of 2024, said Mike Spriggs, Fiserv's director of consumer spending insights.
At the lower-value end of the market, mobile wallet use is making significant inroads into the restaurant sector, particularly fast casual and quick-serve restaurants. The dining sector has the best mobile wallet penetration of all sectors, according to Fiserv. It estimates mobile wallets' share of payments in restaurants at 11.6% in the first two months of 2024, with an average ticket size of $15.63. In quick-serve and fast casual outlets, almost half of all card spending is via a restaurant's mobile app or on its website, where easy menu selection is combined with rewards and payment, Spriggs said.
According to Fiserv, the services sector had the highest mobile wallet average ticket size at $82 in 2022-23, and gas purchases the lowest at $17.
Shoppers take charge
Consumer rather than merchant preference is driving mobile wallet payment patterns.
Mobile wallet transaction size isn't an issue for merchants, according to Frank Pagano, executive sales director at Waukee, Iowa-based processor VizyPay, which focuses on small and medium-sized merchants. "In our experience, there's no difference in terms of transaction size for merchants to accept digital or physical card payments," he said.
Don Apgar, director, merchant payments at Pleasanton, California-based Javelin Strategy & Research, agreed, noting that "there is no mobile wallet transaction size that is too small or too big."
Apple Pay, used by more affluent consumers, has followed a different growth pattern.
"Apple Pay is expanding its influence both up and down in the market, meaning that the average ticket and use cases are expanding both ways," said Richard Crone, CEO of U.S.-based Crone Consulting, LLC.
Since its launch in October 2014, the average ticket size for Apple Pay transactions has nearly tripled. "The average point-of-sale ticket size for Apple Pay is now $81 for credit card payments and $22 for debit, according to our estimates," Crone said.
Another factor driving the use of Apple Wallet is its cashback feature. "If you use the Apple Card in Apple Pay, you get 3% in cashback rewards," said Crone. "So, earning cash rewards for using wallets is driving adoption." The ability to use Apple Pay Later, a built-in buy now/pay later product, is an additional benefit, according to Crone, who estimated the average size of an Apple Pay Later transaction at $155.
A mobile wallet by itself doesn't offer added convenience when compared to tapping cards, Apgar said.
"Consumers need to see additional benefits from using mobile wallets for payments — for example, earning rewards points via a mobile app, which is common in coffee shops and fast-food restaurants," Apgar said.
A cross-border trend
This trend is also happening in Canada, where 57% of mobile wallet users reported mostly using credit cards linked to their mobile wallet for purchases in 2022, according to Ottawa-based Payments Canada, which operates the country's core payment networks. In store Canadian mobile wallet payments rose by 15% in volume and 25% in value between 2021 and 2022, to 333.7 million worth CA$9.6 billion.
Mobile payment offerings are maturing and focused on creating engaging user experiences rather than just basic functionality, and this is contributing to in store mobile payments growth, Payments Canada said in its "Canadian Payments Methods and Trends Report 2023."
One area of expanded use and innovation is in sports team apps and wallets. The Utah Jazz + Delta Center app is a multifunction app for the Salt Lake City-based Utah Jazz basketball team and arena. Besides being a digital wallet, the app offers livestreaming of games, pre-ordering from arena concessions, team merchandise shopping, online gaming and mobile ticket management. "The app is a time-saver if you go to the stadium regularly," said Apgar.
PayPal has partnered with the Phoenix Suns basketball team in Phoenix, Arizona, to provide mobile payments at the Footprint Center arena. The Suns-Mercury Footprint Center app includes e-tickets, arena maps, and a payment wallet that can be used for credit card, debit card and PayPal transactions. It also offers team news plus ticket management.
Another way that mobile wallets have expanded their functionality is by adding
According to Crone, Apple's foray into payments is deeply integrated with its identity verification strategy.
"By controlling a system of record for authenticating user IDs and authorizing transactions, Apple is setting the stage for a significant shift in how ID verification is managed, with a clear focus on integrating government IDs and enhancing biometric authentication capabilities," he said.
