Not long ago, debit cards were a relatively small percentage of the total payment card volume. I had a friend who made a prediction each January that, “This was the year that debit cards would take off.” I asked him why he kept making the same prediction each year, only to be wrong. He explained that he knew one year, he would be right.

A few years ago, I predicted that within five years, most smartphone users would be routinely using their mobile wallets to make purchases. I think it is fair to say now that my timeline was a bit aggressive. However, I still believe that mobile wallets are the future and that plastic cards will go the way of paper checks – some people will continue to use them, but the rest of us will wonder why.

What has slowed the pace of mobile wallets and what foretokens will speed us to widespread adoption?

First, a quick stroll down mobile wallet memory lane. Here are a few facts and generally held beliefs from early 2012:

• Google Wallet was brand new (Sept 2011) and was still in a bit of a “honeymoon” period.
• Apple’s iPhone 5 had not yet launched (Sept 2012); some believed it would include a mobile wallet.
• Predictions were made that the U.S. would bypass the chip cards used by the rest of the world and move straight to mobile wallets.
  • Visa and MasterCard had announced a deadline for EMV “liability shift,” but many believed the associations would delay based on pressures from both merchants and issuers.
• The data breaches at Target, Neiman Marcus, Michaels, Home Depot and at least 15 other retailers had not yet occurred.

What went wrong? What detoured us to the slow lane of mobile wallet adoption? To borrow from my friend Sam Maule, “Sh*ft Happens.” The data breaches forced card associations to hold fast to an October 2015 EMV implementation timeline. Issuers had to scramble to issue chip cards to consumers and merchants needed to put EMV capable Point of Sale (POS) devices into stores. Apple did not introduce Apple Pay until the iPhone 6 was released in September 2014. With the focus on security and the lack of merchant acceptance, Google Wallet failed to gain traction.

Another consequence of these sh*fts was that consumers became increasingly concerned about security. In 2012, according to CG’s mobile payments research, 50% of consumers were unsure if they could trust the security of a mobile wallet.

When Apple Pay was launched, most people were pleased that it incorporated several security features (fingerprint identification and account number tokenization). However, it did not include a robust reason for consumers to habitually use the product. Most notably, there was no loyalty / rewards program associated with Apple Pay.

Bottom line, while a few “early adopters” were excited to test drive mobile wallets, there was little reason for the masses to change their payment behaviors. This explains – at least partially – why only one percent of all U.S. retail transactions use Apple Pay and why my initial predictions about mobile wallet adoption proved to be overly optimistic.

That said, there are four promising signs that we may be moving into the adoption fast lane.

1. More Global Mobile Wallet Providers (with value added services). With the addition of Android Pay and Samsung Pay to Apple Pay, virtually everyone with a smartphone has a mobile wallet option and a reason to use their phone instead of their plastic.
2. More Smartphones. There will be more smartphones with both NFC and biometric capabilities. By 2020, there will be 6.1 billion smartphones in the global market (with most having biometric security features). That’s a stark difference from the 2.6 billion smartphones in today’s market – most of which do not have biometric capabilities.
3. More Merchant acceptance of contactless payments. Many of the new terminals that merchants are implementing support both contactless payments and EMV chip. Many European countries are seeing high growth in contactless payments once the terminals are in place. The U.S. will see similar growth.
4. Customer dissatisfaction with the EMV user experience. Perhaps this is simply a matter of people getting used to something new, but consumers have reported frustration with the time it takes and concern that they are more likely to forget their card in the reader.

While we certainly lost some time in the mobile wallet slow lane, there is an acceleration building. My new (and hopefully more accurate) prediction for mobile wallet adoption is that by the end of 2018, most people in the U.S. will be using their smartphone for payments at least five times a week. By 2020, I expect 20% of all POS payment transactions will be initiated with the consumers phone. Fingers crossed.