The Week in Payments: Mobile Wallets, Subscription Solutions And Recentering Financial Services 

For the last several weeks, it seems, all news has basically been on one subject, the COVID-19 pandemic — since it has been almost impossible to find anything it hasn’t touched and, in some way, fundamentally altered. From commerce, to healthcare, to fitness, to the global price of oil, the world pressing the pause button and sheltering in place has been the overriding story.

But, as Karen Webster and Recurly CEO Dan Burkhart noted during the latest “The Week in Payments” conversation, even a changed world has a way of continuing to turn. Consumers aren’t so much becoming different people, as PYMNTS' latest mobile wallet adoption data indicates, but they are reevaluating a lot of priorities as they are recentering their lives on digital.

Smart businesses, Burkhart noted, are pivoting — doing deals to improve their position, and making long-term connections to their customers built to last beyond the present uncertain moment.

Because no one knows how much will change, and what will remain the same, he said — but what it will take to survive the transition is clear.

“Companies often pay lip service to being customer focused and customer centric. I think now that interactions are so different and social collaboration is forever changing — that that sort of perceptual map really has to keep the customer at the center,” he said.

A challenging task, as customers can still be quite surprising.

Mobile Wallets’ Moment to Shine? Not So Much

Shortly before physical commerce went on hiatus, when consumers were still shopping in stores, but after the point at which concerns about the coronavirus contagion were in wide circulation, we polled consumers about their mobile wallet usage. The expectation was that in a world where consumers were starting to wear gloves to shop in the grocery store, the contactless payment method of the mobile wallet would take on a whole new appeal for consumers.


Consumers made lots of changes in their shopping habits during that time period, but one thing remained consistent: 95 percent of consumers who could have used a mobile wallet to pay for their purchase in store didn’t. In fact, consumers were arguably more resistant than ever. Apple Pay’s usage rate declined modestly from 2019 and to an even greater extent from late 2017, when it peaked at 6.9 percent. Usage of Walmart Pay declined to an even greater degree since 2019, from 4.5 percent to 3.3 percent in our latest survey.

It’s definitely a “Freakonomics result,” Burkhart said, and not one easily explained.

“I always love counterintuitive findings. I would have thought that that mobile wallet adoption would have seen an uptick recently just due to lack of interest in touching buttons, et cetera, and signing out. Perhaps folks are not wanting to pull their phone out and even touch their phones,” Burkhart said.

More seriously, he concurred that in the face of turbulence consumers in some cases will cling to habit — and cards are so ingrained that people prefer using them with gloves on to pulling out their mobile phone. The object lesson is not to make assumptions about what consumers will do, but instead to watch what they’re doing and find ways to follow along.

Even when those moves mean making counterintuitive decisions.

Subscription Services’ Long-Term Play 

There has been a wave of stories of late about consumers with gym memberships finding that their cards keep getting charged, despite the fact that there is no gym to go to. And while tales of subscriptions suddenly rendered less than useful by shelter-in-place orders have proliferated, gym memberships in specific have managed to make the headlines for making it so hard to suspend or cancel a membership that regulatory officials have gotten involved.

The smart move, and the one Recurly has been advising its many partners to make, Burkhart noted, is offering easy access to a pause button. If a consumer isn’t getting the value out of the subscription, or literally can’t due to structural factors, the best way to preserve the long-term relationship is to make a temporary off-ramp easy to get on. Subscription provider anxiety in this arena, he noted, is an understandable phenomenon. Years of managing churn has taught them that when customers get updates from providers to update a card, for example, consumers use that moment to reconsider their situation and determine they no longer need the subscription. Providers have every reason to be concerned that once those consumers off-ramp, they will never find their way back to that on ramp.

But, he noted, the solution there isn’t to try to hold people hostage — because ultimately what other industries with bad customer service that simply make it difficult to leave have learned is that they develop an almost unshakably bad reputation with their customers. The smart brand takes the moment to re-evaluate alongside customers and consider what the long-term loyalty play is — and how to do more, not less, for the customer.

“We’re also seeing companies that are paying it forward in the form of much longer free trial periods or adding more premium features during the free trial period. So really trying to set the hook in terms of delivering a wonderful experience during that initial trial period because people are at home and evaluating new services while they are pruning ones they longer gain value from,” he said. “Some things are going to get unplugged or paused, but there are a lot of businesses that are seeing tremendous uptakes as well — distance learning, language classes, workforce collaboration tools. Those sorts of businesses, it’s an absolute land grab right now.”

And as for the future? There are a lot of unknowns, Burkhart said, but trendlines are certainly emerging, particularly in financial services.

The Changing Shape of Serving the Customer 

Deals have a way of continuing to happen, and this week the FinTech world saw a big one in the form of SoFi snapping up Galileo Financial Technologies for a total price of $1.2 billion composed of shares and cash. Galileo provides savings and checking account-like abilities through its open application programming interfaces (APIs) that can be accessed by mobile or desktop. Direct deposit, account setup, funding and check balance are some of the services they offer, among other features.

SoFi CEO Anthony Noto said in the announcement, “SoFi has established itself as a leader in the fintech sector, providing our more than one million members a full array of financial products to help them get their money right.”

It is one of a series of similar moves in financial services of late — LendingClub’s purchase of Radius Bank for $185 million or Square being approved for a banking license — and all speak to a world that is changing, with consumers relearning their entire day-to-day routine from a digital point of view. Those consumers, he noted, will come back to Main Street in some places — people will want to socially interact. But will they want to go back to the bank branches? That is a much less settled question.

“A lot of opportunities like that are going to continue to present themselves where the innovators that are on their toes and the companies that are looking for opportunities to sort of reposition themselves right now when most are sort of hunkered down and questioning their future,” he said. “The companies that are in an aggressive stance now are going to emerge far stronger as a result of this.”

The ones that aren’t innovating, Burkhart said, might not emerge at all.

Because the world may be a different place, but the imperative to service the consumer remains the same. In fact, it is more acute now than it has ever been, because there is so much uncertainty in the landscape. Consumers are digging into their networks of all kinds — with friends, with family and even with brands — because connection to things that are trusted is a huge priority right now.

“Consumer habits are normally very tough to break, but this certainly is forcing all of us to reevaluate our well-worn path and our habits throughout the day for how we get things done,” he said. “And that is an opportunity for businesses to really think about how they can delight their customers perhaps in a different mode of interaction.”



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.