Mobile Commerce and PayPal: What Those Usage Numbers Really Mean
by Karen Webster
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Mark Twain reminded us that there are three kinds of lies: “lies, damn lies, and statistics.” That famous adage, as most of you know, is a nod to how stats can be twisted and turned to support just about any position anyone wants to argue.
What brought this old adage to the front of my mind today is a piece that I came across while catching up on a bunch of things in my inbox this week. It was an article with the following headline: “67% of mobile buyers use PayPal for purchases.” The article reported on a survey by ShopVisible that reviewed 23,000 web and mobile transactions over a period of 60 days. The article described findings that “only 33% of consumers chose to pay by credit card in thousands of mobile transactions.” ShopVisible’s call to action is for merchants to include alternative payment methods in their mobile offerings “if they want to capture mobile commerce sales.” The article concluded with a quote by the ShopVisible CEO who expressed great surprise over the “dramatic swing of percentages” between online and mobile payment choice (their findings reported that 62% of online buyers choose to pay with credit card, ~17% with PayPal, and ~13% with Amazon).
I’d like to make three broad points about this piece.
The first is related to the stats that are (or in some cases aren’t) reported.
It hard to know from reading this story how many of the 23,000 transactions were mobile. The story said “thousands” of mobile transactions but was pretty vague beyond that. I think it sort of matters whether we’re talking about 67% of 1,500 or 67% of 15,000.
What also matters is the distinction between mobile buyers and mobile transactions. The headline reported that “67% of mobile buyers use PayPal” while the first paragraph said that “67% of mobile transactions” were via PayPal. It would be good to know whether one person accounted for a third of the transactions or whether they were more evenly distributed among multiple consumers especially if there aren’t that many transactions (or buyers) being studied.
But what really matters, I think, is what was being purchased and where it was purchased from. PayPal has been a digital wallet for a very long time but its online acceptance, while growing, is still quite limited. Its mobile acceptance is even more so. This is not a knock against PayPal (who I think is doing great stuff in the mobile commerce arena and giving just about everyone else a run for their money), but simply the reality of where things are at the moment. In mobile, things are just getting started.
So, just where were these “thousands” of mobile transactions taking place? Just to be clear, mobile commerce, while growing like a weed, is today a teensy-weensy pindot of all commerce and only about 6% of online commerce today. And, a lot of it is attributed to digital goods (like apps from the Apple apps store, iTunes and ebooks for the Kindle) and lattes at Starbucks. It seems really hard to imagine then that none of the mobile transactions in this survey were the result of using iTunes or Amazon or even Starbucks (If 67% of the transactions use PayPal and 33% use credit cards there isn’t any room left over for other payment types, unless I lost my basic math skills while on vacation).
So, knowing how these 23,000 web and mobile transactions, or buyers, were selected and what they are is a pretty important input into knowing how these results could be applied to the broader topic of mobile commerce and consumer behavior/payment choice.
That brings me to the second point and that is the call to action in the piece.
Let’s suppose now we take the results at face value. Would we all come to the same conclusion, e.g. that merchants need to add alternative payments methods to their mobile experience if they want to seize the mobile commerce opportunity?
I say no.
If I am using one of the many apps that are linked to a credit card that I have registered with that app, I (as a consumer) am as happy as a clam and alternative payments options are a moot point for both merchants and consumers. Ditto if I am paying my favorite food truck lunch guy with a card that he swipes via his Square device, my plumber who whips out his GoPayment device at the same time I whip out my credit card or my Starbucks barista who happily scans my bar code at check out. And, if you live in NY, you won’t need an alternative payments provider to buy large consumables from the P&G “truck” either. (They are using QR codes and check out via Wal-mart.com) These mobile commerce transactions are happily and conveniently (for everyone) riding the existing payments rails.
What I’ll say yes to though is the need to add wallet functionality to the mobile ecommerce experience. Checking out on a mobile device without it is just plain torturous – the combination of small mobile screens, non-tactile keyboards and multiple check out screens is migraine-inducing. So, if given the opportunity to check out via a one click with PayPal or Amazon or iTunes, I (and just about everyone I know) will surely take it. I have to really want something badly (or have no other option) to complete a commerce transaction on my iPhone. And I have small fingers. Using a digital wallet on a mobile phone beats the alternative any day of the week.
So, back to the reported survey results. Depending on what these transactions were and where they were taking place, it doesn’t surprise me that PayPal dominated credit cards. Today, at least, the dominant digital wallet on mobile devices is PayPal - so it isn’t surprising that PayPal came in on the top of the pile in this survey. Visa and MasterCard have recently launched its own wallet versions so the options for mobile ecommerce will likely become much more diversified and, hopefully, easier all the way around very soon.
On the flip side, it’s not surprising to me at all that the survey results for online purchasing were just about entirely the opposite. As mentioned before, PayPal acceptance online is growing but nowhere near the ubiquity of the traditional players. Online, consumers have traded off a frictionless shopping experience for acceptance. What will be interesting to watch is what happens when merchants accept all digital wallets – and consumers have a choice. What will they pick and why? There are, for now, at least a few retailers (e.g. Macys, Barnes & Noble, American Eagle, Aeropostale) who are essentially going to host that experiment for us since they are implementing multiple wallets.
That brings me to my third point.
Mobile is such a huge commerce opportunity that there is absolutely no shortage of pieces citing surveys and statistics about its adoption and usage. It’s a bit mind numbing to keep it all straight. But the next thing you know, a raft of PowerPoint decks start circulating that take headlines and present them as fact and at face value. (I will resist revisiting the NFC adoption projections of years back that drove the hundreds of millions of dollars of investments in that technology – that today remains largely inert in the US.) It sort of becomes the game of gossip on steroids in the digital age in an effort to convey information in near-real time to those who need to know.
My advice? The next time you see headlines and statistics on mobile commerce, just channel your inner Mark Twain and do your colleagues a huge favor. Dive a little deeper into the story to make sure you’re getting the whole scoop and nothing but the scoop before passing it along.
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