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Consumer education key to success of mobile

February 27, 2014 by Dan Kramer — Senior Vice President, Marketing & Merchant Servic, SHAZAM

Despite ever-increasing mobile payment options and more hands-on experience using them, some consumers are still not sold on the value of mobile transactions.

According to a recent Harris Interactive poll, 64 percent of consumers believe mobile payments using near-field communication (NFC) to authenticate a credit or debit card payment will eventually replace plastic. Fifty-nine percent said they believe mobile will eventually replace cash, as well.

Just 29 percent indicated they expect tap-to-pay to replace credit or debit card transactions by 2018, with 26 percent predicting the new technology will supplant cash, credit, or debit payments during that time period.

These results come as more Americans have had first-hand experience with mobile transactions (either by doing it themselves or seeing it done). Nearly a third of all Americans (32 percent) have swiped their payment card through a smartphone attachment, and 17 percent have used their phone to pay at the point of sale (POS).

Twenty-four percent of consumers surveyed told Harris they’d be interested in using a mobile payments solution; 37 percent of smartphone users said the same thing. Interestingly, this survey shows consumer interest actually dropping. In 2012, 27 percent of consumers and 44 percent of smartphone users wanted tap-to-pay.

Fifty-three percent of all respondents said security issues keep them from wanting to store sensitive data on a phone: 47 percent didn’t want to save sensitive data on their phone and 53 percent didn’t want to send it to a retailer’s system via NFC.

The lack of sufficient pain points, however, remains a trouble spot for mobile tech innovators as they pursue consumer demand. Consumers love their plastic and don’thave a lot of trouble using them. Fifty-three percent of all users said they saw no reason to want to switch from debit cards to smartphone-based tap-to-pay; among smartphone users that number rose to 58 percent.

If solving a problem that doesn’t actually exist is the wrong way to go, incentives may be the right way. However, the percentage of consumers who said they’d try mobile payments for the right offer dropped in 2013 by between 5 percent and 10 percent, depending on the incentive program.

“Right now, the bottom line is that consumers don’t yet feel as if they’re being presented with a compelling enough reason to switch their payment habits, nor are they confident that these new methods are secure,” according to Aaron Kane, senior research director at Harris, in a press release.

The fact that some consumers continue to drag their feet in adopting mobile payments is in direct contrast to continued advancements in mobile payments technology, and the current push by many mobile commerce players to see widespread adoption of this developing payments option.

Community financial institutions should consider the potential value in educating consumers on the security and convenience of mobile payments. Helping your customers understand the benefits can put financial institutions in the driver’s seat when it comes to effectively informing customers on how mobile payments can enhance their daily financial lives.

According to a recent Harris Interactive poll, 64 percent of consumers believe mobile payments using near-field communication to authenticate a credit or debit card payment will eventually replace plastic. Fifty-nine percent said they believe mobile will eventually replace cash, as well.

But only 29 percent indicated they expect tap-to-pay to replace credit or debit card transactions by 2018, with 26 percent predicting the new technology will supplant cash, credit, or debit payments during that time period.

These results come as more Americans have had first-hand experience with mobile transactions — either by doing it themselves or by seeing it done. Nearly one-third of Americans (32 percent) have swiped their payment card through a smartphone attachment, and 17 percent have used their phone to pay at the point of sale.

Twenty-four percent of consumers surveyed told Harris they’d be interested in using a mobile payments solution; 37 percent of smartphone users said the same thing.

Interestingly, this survey shows consumer interest actually dropping. In 2012, 27 percent of consumers and 44 percent of smartphone users wanted tap-to-pay.

Fifty-three percent of all respondents said security issues keep them from wanting to store sensitive data on a phone: Forty-seven percent didn’t want to save sensitive data on their phone and 53 percent didn’t want to send it to a retailer’s system via NFC.

The lack of sufficient pain points remains a trouble spot for mobile tech innovators as they pursue consumer demand. Consumers love their plastic and don’t have a lot of trouble using it.

Fifty-three percent of all users said they saw no reason to want to switch from debit cards to smartphone-based tap-to-pay; among smartphone users that number rose to 58 percent.

If solving a problem that doesn’t actually exist is the wrong way to go, incentives might be the right way. However, the percentage of consumers who said they’d try mobile payments for the right offer dropped in 2013 by between 5 percent and 10 percent, depending on the incentive program.

“Right now, the bottom line is that consumers don’t yet feel as if they’re being presented with a compelling enough reason to switch their payment habits, nor are they confident that these new methods are secure,” said Harris senior research director Aaron Kane in a press release.

The fact that some consumers continue to drag their feet in adopting mobile payments is in direct contrast with continued advancements in mobile payments technology, and the current push by many mobile commerce players to achieve widespread adoption of this developing payments option.

Community financial institutions should consider the potential value in educating consumers in the security and convenience of mobile payments. Helping customers understand the benefits can put financial institutions in the driver’s seat when it comes to effectively informing customers on how mobile payments can enhance their daily financial lives.

About Dan Kramer

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