Mobile Wallet Payments Reach $500 Million
SEATTLE -- Mobile wallet applications (apps) accounted for $500 million worth of sales transactions in 2012, according to a new report from business intelligence provider Berg Insight. Where the majority of these mobile wallet payments came from may perhaps come as a surprise.
Despite plenty of media coverage around the mobile wallet apps from Google, Square, LevelUp, PayPal, Isis and others, the vast majority of last year's in-store mobile wallet transactions came solely from Seattle-based Starbucks Corp.'s smartphone card app, Berg Insight reported.
Starbucks is considered a trailblazer when it comes to mobile wallet payments, with company CEO Howard Schultz strongly behind the effort. In fact, he recently stated that Starbucks processes 3 million mobile transactions per week, although some are through the Square Wallet app, according to a report by Gigaom.
The $500 million worth of mobile wallet transactions represents only a fraction of all credit and debit card payments. However, Berg Insight projects that the mobile wallet market will reach $35 billion by 2017, led by the growth of such apps as Google and Isis, as well as the future launch of the Merchant Customer Exchange, which is backed by many convenience store industry chains including 7-Eleven Inc., Alon Brands Inc., QuikTrip Corp., Sheetz Inc., Wawa Inc., Hy-Vee Inc., RaceTrac Petroleum Inc., Shell Oil Co. and Sunoco Inc.
Even if the mobile wallet market eclipses $35 billion in four years, it still will account for only a minority of credit and debit card transactions. Consumer happiness with swipe cards and a need to incentivize customers to use mobile wallets are two barriers standing in the way of mobile wallet growth, according to experts.