Samsung Pay shows how rewards can boost adoption

BI Intelligence

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In November, Samsung Pay launched Samsung Rewards, a wallet-specific loyalty program that rewards users proportionally for how often they spend on the wallet.

At the Consumer Electronics Show (CES) this week, Samsung Pay executive Nana Murugesan announced that it’s seen meaningful gains in usage since launching Samsung Rewards, pointing to the impact that loyalty and rewards integration can have on mobile wallet adoption and usage.  

• Since launching the rewards program, the wallet has seen a “surge” in monthly active users.
• Those users are paying more frequently. Samsung Pay’s average number of daily transactions has nearly doubled, and the firm set a new record for daily transactions in December, according to Murugesan. Even more, the number of “power users,” a group that uses the wallet roughly once a day, more than doubles every week.

Samsung Pay’s growth is an example of why integrating wallet-specific loyalty and rewards offerings could be key to catalyzing wallet growth.

• Users want rewards, loyalty, and incentives in their wallets. Among existing wallet users, mobile rewards and loyalty offerings are in demand. But Samsung Rewards is wallet-specific, rather than retailer-connected, which could give it a leg up on acquiring new users. That’s because 44% of likely US mobile wallet adopters would test the service if given access to a wallet-specific rewards program. Samsung Pay’s major gains since introducing Samsung Rewards indicate that users want these features in practice as much as they do in theory, and could help the product overcome adoption hurdles that have been plaguing wallets across the industry.
• And engaging users will grow spending, since “power users,” as Samsung Pay calls them, are likely to drive the largest share of mobile wallet volume growth. BI Intelligence expects that “power users,” rather than regular or disengaged customers, will drive most of the mobile wallet growth in the US through 2020. So products like Samsung Rewards, which seem to move the needle more toward power users, could actually be quite beneficial in driving up not just adoption, but habit formation and spending, since they incentivize regular usage through rewards. If we see other wallets, like Apple Pay or Android Pay, implement similar programs, it’s likely that both adoption, which has stagnated, as well as usage, will begin to rise again, meaning that rewards could be the key to wallet success in the US.

Mobile payments are becoming more popular, but they still face some high barriers, such as consumers' continued loyalty to traditional payment methods and fragmented acceptance among merchants. But as loyalty programs are integrated and more consumers rely on their mobile wallets for other features like in-app payments, adoption and usage will surge over the next few years.

BI Intelligence, Business Insider's premium research service, has compiled a detailed report on mobile payments that forecasts the growth of in-store mobile payments in the U.S., analyzes the performance of major mobile wallets like Apple Pay, Android Pay, and Samsung Pay, and addresses the barriers holding mobile payments back as well as the benefits that will propel adoption.

Here are some key takeaways from the report:

• In our latest US in-store mobile payments forecast, we find that volume will reach $75 billion this year. We expect volume to pick up significantly by 2020, reaching $503 billion. This reflects a compound annual growth rate (CAGR) of 80% between 2015 and 2020.
• Consumer interest is the primary barrier to mobile payments adoption. Surveys indicate that the issue is less the mobile wallet itself and more that people remain loyal to traditional payment methods and show little enthusiasm for picking up new habits.
• Integrated loyalty programs and other add-on features will be key to mobile wallets taking off. Consumers are showing interest in wallets with integrated loyalty programs. Other potential add-ons, like in-app, in-browser, and P2P payments, will also start fueling adoption. This strategy has been proved successful in China with platforms like WeChat and Alipay.

In full, the report:

• Forecasts the growth of US in-store mobile payments volume and users through 2020.
• Measures mobile wallet user engagement by forecasting mobile payments' share of their annual retail spending.
• Reviews the performance of major mobile wallets like Apple Pay and Samsung Pay.
• Addresses the key barriers that are preventing mobile in-store payments from taking off.
• Identifies the growth drivers that will ultimately carve a path for mainstream adoption.

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The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of how mobile payments are rapidly evolving.