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Innovations and Payment Systems

Online and mobile payment statistics

Summary

Once upon a time, a brick-and-mortar store was the center of the shopping universe. But online shopping has become the norm for many, and continues to grow

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Once upon a time, a brick-and-mortar store was the center of the shopping experience. Now online shopping has become the norm for many people, and with it, comes new payment choices and challenges.

Online sales (excluding mobile) took a dip after the Great Recession, but they have since picked up. In the third quarter of 2016, retail digital commerce on desktop and mobile reached $84.3 billion.1

 

U.S. e-commerce spending

Digital commerce growth substantially outperformed total consumer discretionary spending in the third quarter of 2016. Total digital commerce accounted for more than one in every seven discretionary dollars spent by consumers. In that quarter, consumers spent an average of $86.30 per transaction, an 11 percent increase from the same quarter in 2015.1

Online revenue was up 9.2 percent in the third quarter of 2016 compared to the previous year. The share of mobile orders (phone and tablet) out of all e-commerce had increased to 31 percent in November 2016, up from 29 percent in 2015.3

For the fourth quarter of 2016, $109.3 billion was spent online, marking an 18 percent increase over the same quarter in 2015.6

The majority of online buying occurred on desktop computers, with $86.6 billion spent, up 13 percent from the year before. mobile commerce spending (smartphones and tablets) contributed 22.7 billion, a 45 percent year-over-year growth. Overall, mobile accounted for 21 percent of total digital commerce dollars in the fourth quarter of 2016.6

In the fourth quarter 2016, e-commerce accounted for 8.3 percent of adjusted total retail sales, a 1.9 percent change from the previous quarter, and a 14.3 percent increase from the same quarter in 2015.4

The growth of m-commerce
When asked if they would load their card information into a mobile phone or mobile wallet for the purposes of making a purchases, 44 percent of consumers said they likely or definitely would load a credit card or that they had already loaded one. Debit cards were comparable, at 42 percent.7

Interest in Various Mobile Phone Features

2015

2016

Use your phone to immediately stop a transaction that was not made by you

66%

69%

Instantly view transactions made with your debit or credit cards

60%

62%

Receive instant offers and promotions for the store you are visiting

47%

54%

The ability to use your phone to turn your payment card on or off based on location

52%

53%

The ability to use your phone to turn your payment card on or off based on type of store

50%

50%

The ability to use your phone to turn your payment card on or off based on time of day

48%

50%

Keep all your loyalty / rewards cards on your phone

47%

49%

Transfer money to another person, such as a family member or friend

47%

48%

A mobile app that allows you to capture bills you receive in the mail

NA

46%

Use a mobile app to change the PIN on your debit or credit card

39%

41%

Use your phone instead of a payment card to make purchases when checking out

39%

40%

A mobile app that will allow you to split your restaurant bill with friends

NA

40%

Store your government issued identification, such as a driver’s license

35%

37%

Use a wearable device, such as a smart watch, to make a payment

29%

31%

Source: TSYS

Mobile commerce spending (m-commerce) has attained a much more meaningful share of total digital commerce sales, hitting 20 percent for the first time in Q3 2016, a 3.6 percent increase over the same quarter a year before. M-commerce growth outpaces e-commerce and brick-and-mortar stores when it comes to discretionary spending.1

According to a study by Bank of America, 19 percent of Americans turn to their mobile device to shop, 51 percent use it to book travel, and 24 percent use it to order food.9

Two in five consumers (40 percent) would use or already use their phone to make purchases at checkout, up from 35 percent in 2015. Millennials are most likely to do so (57 percent). When it comes to paying someone back, digital methods (28 percent), including payment and mobile banking apps, are nearing traditional methods such as cash (57 percent) and check (40 percent).9

Between May 2016 and June 2016, the percentage of all consumers who had made mobile payments jumped from 30 percent to 74 percent. In-app and online purchases on mobile phones jumped from 23 percent to 55 percent.8

Types of payments made via mobile in June 2016
Paid a bill

54%

Received loyalty points

29%

Sent/received money

27%

Made in-store purchases

23%

Paid for parking/taxi/other transit

13%

Made payment by text message

4%

Sent money internationally

2%

Source: First Annapolis Consulting/M&A Advisory Services

The average mobile wallet user loads 1.9 cards into their phone’s wallet.8

The U.S. transition to EMV has been painful, however, and the forced change may represent an opportunity for digital wallet providers to increase usage.2

Who is shopping via mobile?
According to FICO, the Digital Generation (Gen D) is not an age, but a mindset. It’s made up of all technologically savvy consumers. Millennials and Gen Xers make up a large portion of this audience, but not all.2

Among Gen D, mobile payment usage is fairly low, but significant indications point to increased use of mobile payment services in 2017. In 2015, only 9 percent of 18- to 24-year-olds were using mobile payments, and only 4 percent of 25- to 34-year-olds.2

The use of mobile payment apps among millennials is low compared to awareness. While 64 percent of millennial iPhone users have heard of Apple Pay, only 8 percent use it. Similarly, of the 39 percent of millennials who use a Samsung phone, only 8 percent use Samsung Pay. One in four millennials have tried a mobile payment, but stopped doing so. The main reason for not continuing to use mobile payments was security concerns.5

However, the numbers are a little more promising when looking at total consumers, rather than just millennials. In June 2016, 89 percent of consumers were aware of Apple Pay, and 42 percent were enrolled in the payment service.8

Mobile app awareness, use among total consumers June 2016
Apple Pay
Consumers are aware

89%

Enrolled

42%

Have made a purchase

73%

Made purchase once a week or more

24%

Android Pay
Consumers are aware

64%

Enrolled

14%

Have made a purchase

65%

Made purchase once a week or more

22%

Samsung Pay
Consumers are aware

54%

Enrolled

18%

Have made a purchase

71%

Made purchase once a week or more

32%

Source: First Annapolis Consulting/M&A Advisory Services

Credit cards favored for online purchases
When it comes to making online payments, consumers prefer to use credit. However, PayPal has long been a strong payment option for those paying online.7

Still, credit cards far outpaced debit and PayPal when it comes to payment preference when shopping online and when using online travel sites.7

When it comes to online purchase safety, 42 percent of consumers feel credit cards are safest, followed by PayPal at 26 percent and debit cards at 12 percent. Ten percent of consumers said they didn’t have a preference, and the last 10 percent preferred a prepaid or gift card when it comes to safety.7

 


Sources
  1. comScore State of the U.S. Online Retail Economy, Q3 2016
  2. FICO Decisions The Digital Generation 2016
  3. VocaLink Millennials U.S. mobile payments check May 2016
  4. First Annapolis Consulting/M&A Advisory Services Navigator: Thought Leadership on the Global Payments Industry August 2016 [mobile payment stats folder]
  5. Custora E-Commerce Pulse: Q3 2016
  6. U.S. Census Bureau News Quarterly Retail e-Commerce Sales 4th Quarter 2016
  7. comScore press release, February 13, 2017
  8. TSYS 2016 Consumer Payment Study
  9. Bank of America Trends in Consumer Mobility Report 2016

See related:Credit card statistics, Mobile payment statistics, Payment method statistics

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