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Mobile payment apps like Apple Pay and Venmo have grown exponentially since their launch. Users will find solace in their ease of use and exceptional security. Despite the power behind such names, the original and most used mobile payments app was developed by a business model well-removed from the tech giants in Silicon Valley.
Mobile payment apps are used to make payments to merchants; they may have some overlap with money transfer apps, which allow person-to-person transfers.
Key Takeaways
- Apple Pay and PayPal’s Venmo are two of the leading mobile payment applications.
- However, Starbucks has developed one of the most popular and most-used apps on the market.
- The coffee company is seeing increased competition from the likes of Cash App and other mobile apps.
- Payment app developers have worked hard to ensure that mobile payments and money transfer apps are as secure, if not more, than physical cards.
Non-Traditional Payment App Leader
Starbucks has a compelling story to tell about how your life will be better when you tap and pay, instead of pulling out a card or even cash. The free Starbucks mobile-pay app allows you to order on your way, and then just walk in (or drive-thru) and pick up your order without waiting in line.
The Starbucks Rewards loyalty program, which is mainly accessed through its mobile app, had approximately 34.3 million users as of Q1 2024.
Meanwhile, other merchants have been upgrading their credit card payment processing devices they use in order to enable more secure EMV technology, and many smartphones are ready for tap-and-pay use.
Popular Mobile Payment Services
There has been a surge in mobile payment services beyond Apple and Venmo. PayPal bought Braintree in 2013, which had purchased Venmo the year before. Meanwhile, there’s Zelle, Cash App, and Google Pay.
Many payment apps are default choices depending on which phone you have, and they work much the same. You download the free app, upload your credit or debit cards, and “tap to pay” with your phone at any retailer that accepts that service.
PayPal works the same way, and with the same card reader, if the merchant has signed up to accept PayPal payments. PayPal is not as widely available in brick-and-mortar stores.
Security
Due to the ease of taking or cloning phone data, there remains one big question in consumers’ minds: how secure are mobile payments? It seems that the big players have spent a lot of time and effort making sure that mobile payments are more secure than using a physical card.
First of all, a merchant will never see your credit card number or the authorization code from the back of your card or even your name. And, when you make a purchase, instead of your credit card number being used, a one-time encrypted number is generated—a token—to authorize the purchase. It expires shortly afterward.
Even if your phone is lost or stolen, there are layers of protection. Mobile wallets are behind a lock screen, requiring a PIN number, face recognition, or fingerprint authentication to use. So access is restricted. What’s more, your credit or debit card numbers are not stored on the phone.
Finally, there are features that the companies urge you to activate in case you lose your phone: Android Pay users, for instance, are warned to turn on the Android Device Manager so that the phone can be located if it’s lost or stolen, and locked remotely if needed. For Apple Pay, the Find My iPhone feature lets you suspend the mobile wallet remotely.
785 million
The number of Apple Pay active users worldwide in 2024.
Slow Adoption in Western Culture
The American attitude is in sharp contrast to that of Chinese consumers, who have embraced cash-free living. Millions of Chinese consumers use mobile payments. They use their mobile phones to pay for taxis and meal delivery, in Walmart stores, and at mom-and-pop market stands. Alipay, owned by Alibaba, is China’s dominant mobile payment service.
In China and in other developing nations, where many have never used a traditional bank, many newly minted consumers are avoiding banks and substituting a mobile payment service. Alipay users can deposit their money in a money market account that pays the investor higher interest rates than traditional bank savings accounts.
What Is a Mobile Payment App?
A mobile payment app is an app on your phone that lets you pay for goods and services without the need for cash or a physical card. The app links to either your credit card or bank account, where the cost of the good or service is charged. You can use a mobile payment app by placing your phone near a contactless payment terminal, sending/receiving money to friends and family, or paying your bills.
What Is the Most Popular Mobile Payment App?
WeChat Pay and Alipay are most likely the most popular mobile payment apps given China’s widespread use of the technology and its large population. In the U.S., the most popular are PayPal, Venmo, Zelle, and Apple Pay, in that order.
What Is the Best Online Payment App Without a Bank Account?
There are many payment apps that you can use without having to link your bank account, especially if you receive money from others and keep it as a balance within the app. Some of the most popular apps, such as PayPal, Venmo, Cash App, and Revolut, allow you to hold and spend balances this way. If you want to add funds yourself, this usually requires linking a bank account.
The Bottom Line
While tech giants like Apple and PayPal dominate the conversation around mobile payments, it’s Starbucks, a coffee company, that has built one of the most successful mobile payment ecosystems. Its app, which is tightly integrated with its loyalty program, shows how convenience and customer loyalty can drive widespread adoption.
Since their creation, mobile payment apps have become increasingly secure, often outpacing the safety of traditional cards, and while U.S. customers have been slower to transition from cards to apps, other countries, like China, have already become near cashless.
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