Tailoring the payments experience for the $101B mobile app opportunity

Tailoring the payments experience for the $101B mobile app opportunity

iStock illustration.

By Jared Ronski, principal, PayArc

This summer, the mobile app industry will turn 10.

The ecosystem, led by giants such as Apple, and Google, represents a huge payday opportunity for businesses and app developers alike. In more specific terms, there is a projected $101 billion in revenue to be generated by mobile apps by 2021. For those who are looking to dip their toes in this deep pool, there are several key factors to take into account. 

Customer experience rules

It's no surprise that successful mobile apps are built around a positive customer experience. In a world of mobile-first, consumers expect and demand a seamless user experience from start to finish. To that end, poor performance will cause 90 percent of users to stop using an app and functionality errors will actually compel 86 percent of users to delete or uninstall an app. 

Customer experience also entails general usability, including content, layout, design, and searchability. Users should be able to easily and effectively use your app, which calls for a consistent experience. Developers should consider clear icons, a smooth scrolling experience, and ease-of-tap-ability. Buttons should be easily "tap-able" and well-spaced. 

Finally, and perhaps most importantly, the payment experience should be fully optimized from beginning to end. Before that stage, however, one must determine how the mobile app will be monetized.

Understanding the nuanced world of mobile app monetization

Mobile app monetization requires a merchant (and/or developer) to decide which business model is a best fit. Some mobile app monetization models include: 

In-app purchase: Merchants that sell physical goods or services (retail, e-commerce, and gaming merchants are well-served here) should consider the in-app purchase model. Gaming apps have utilized this model to drive scalable revenue for years. One of the considerations for this model is to offer user-friendly and personalized purchase incentives. 

Freemium app: Not unlike a typical ecommerce subscription billing model, this enables merchants to onboard users at a freemium pricing tier and upsell to premium features. The "free" price point attracts a broader user base, teasing them with available content and then enticing them to pay for unique premium content and features. 

Subscription/Paywall: With this model, the app limits the amount of free content available to users and requires a subscription to view additional content. Many popular content service providers user this model, including Netflix, Hulu, and Spotify. This is an ideal monetization model for apps offering services primed for repeat-use. 

It may be beneficial to consider a hybrid approach, as well. Your business objectives should feed the monetization model choice, and UX testing can inform the decision as well. 

Payment experience should not be an afterthought

Regardless of the monetization method you choose, the payment experience should be seamless for users. While the types of goods and services you offer may dictate your payments options to a degree, it is a consideration that cannot be overlooked. 

Merchants that sell digital content (music, books, images, games, magazine subscriptions, etc.) hosted on Apple servers are required to use the Apple Pay in-app purchase process. Those selling physical goods or services through Apple must handle payment processing on their own via your merchant account or another service like Stripe or PayPal. We use Apple as an example, but this is standard across many platforms. 

If you decide to work with a payment processing partner that specializes in mobile app payments, you should ensure that the following factors are integrated into the overall payments experience.


Consumers will not interact with a mobile app they don't feel is secure. They certainly won't provide payment details if they don't believe their sensitive card data will be protected. Be sure to utilize tools like 3-D Secure 2.0 to keep transactions secure and the payments experience frictionless. If you have a high rate of chargebacks, consider working with your solution provider to customize fraud prevention tools for your business model. 

Customer service

Customer service is an often-overlooked aspect of the payments experience. If customers are dissatisfied with your product or service, they should have a clearly-articulated way to return the goods, ask for a refund, or at a minimum, speak to a real person about their problem. Be sure to have contact information clearly advertised within your app and a working, staffed phone number to answer questions. Customer service is also a great first defense against unnecessary chargebacks via friendly fraud. 

Fraud prevention

Mobile app payments are as susceptible to bad actors as any other card-not-present payment ecosystem. Merchants need to have customized fraud tools in place to ensure that suspicious orders are flagged for review without inhibiting legitimate sales. Geotargeting, chargeback notifications, and other fraud controls can protect your payments—and your bottom line. 

Payments should never be an afterthought; this is especially true for those that want to take advantage of the flourishing mobile app opportunity. Do your homework, optimize user experience, and ensure your payments experience is frictionless and safe. This groundwork is straightforward but necessary to partake in a slice of the $101 billion mobile app pie.

Jared Ronski is principal at PayArc and works with merchants to ensure they are paired with the right merchant account for their specific business needs. He has worked closely with higher risk business models and has provided companies of all sizes with payment processing solutions.

Topics: In-App Payments, POS

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