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Mobile Payment in the U.S.

Mobile payment is disrupting the usual payment pattern and habits of consumers, according to my research work on Alipay. We observe a 2.93% increment in the total transaction amount and a 7.14% increment in frequency after adopting Alipay mobile payment. Postulating approximately 70 million mobile payment users in the US in 2020, this estimation suggests a close to 1 billion USD additional consumption per year with mobile payment adoption.

As of 2013, Alipay has overtaken PayPal and become the largest mobile payment platform in the world. During the fourth quarter of 2016, Alipay had a 54% market share of China’s 5.5 trillion USD mobile payment market. We expect in the near future, mobile payment will play a vital role in the US payment market. Our results further unveil that both internal factors such as higher transaction demand and external factors such as local penetration are associated with mobile payment adoption. Thus, in the US market, to motivate the mobile payment adoption, banks and retailers should target consumers with higher transaction demand, and promote mobile payment with word-of-month advertisement.

Once consumers adopt mobile payment and integrate it into their daily lives, it effectively replaces the credit cards in their wallets. It’s the future of how consumers will pay for small-ticket items, which means you will see fewer and fewer people carrying actual, physical credit cards in the coming years. They’ll just carry their phones, so they may not even need their wallet. It’s more convenient and it merges payment channels.

Most of the retailers that produce low-cost items that are sold with great frequency are really embracing mobile payment channel and are at the vanguard of the movement. You tend not to buy coffee through your desktop computer, nor would you use the mobile channel on your smartphone to purchase a car. People purchase those lower value items more frequently, so the volume of those goods sold increases. For retailers it means that, depending on the sector, you will want to offer customers multiple channels through which they can pay for their goods. If you’re in an industry with a high number of transactions or transaction frequency, it’s really in your best interest to get ahead of the curve and embrace the mobile channel.

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